Consumer Behavior, Technology

FOMO & the Retail Experience

iStock_000018141330SmallA Nation of Smartphone Junkies

It’s a truism that an overwhelming number of people today are addicted to their electronic devices. According to Pew Research, the cell phone has been the most quickly adopted consumer technology in the history of the world. Over 90% of American adults (97% of the under-35 crowd) own them. It is estimated that by the end of this decade, all but the oldest, youngest, poorest and most technophobic among us will own smart phones.

We use our phones as camera, alarm clock, board game, metronome, magazine, map, bank, GPS tracking device, bank, TV, and more. Mostly, though, we use them for their original purpose: to stay connected. We can reach out to friends and family members instantaneously, and know where our kids are at every moment of the day or night. We can keep up on breaking news while hiking in the Adirondacks. We can watch a revolution unfolding in the city center of a Middle Eastern country thousands of miles away. Increasingly, we can do more than one of these things at a time.

iStock_000021967210MediumNot all of this connecting is necessarily a good thing. The fact that we are reachable 24 hours a day, 7 days a week, 365 days a year means we never get a break from work, other people, or the constant bombardment of news and information. Most of us check our business emails at least once before 7:30 A.M. A recent study found that 8 out of 10 teenagers sleep with their cell phones on or near their beds. The number of hours spent on Facebook and Twitter — for people of all ages — is soaring every year. Identity theft and cyber-bullying are two of the fastest-growing crimes in the US.

What is probably the worst by-product of our obsession with technology, though, is using mobile devices behind the wheel, or “driving while intexticated,” which results in the death of 11 teens each day in the US, according to the Institute of Highway Safety. Almost a quarter of all car accidents, or a total of 1.3 million crashes last year, involved cell phone use.

Why are we so hooked on a small, rectangular, plastic-metal-and-glass lifeline? One reason, which has its origins in the very existence of the devices itself, is the Fear Of Missing Out, or FOMO.

Fear of Missing Out (FOMO): Social Anxiety

Not to be confused with MoFo (which means something quite different), FOMO is defined as social anxiety brought on by the advance of technology and the resulting amount of choice it gives individuals. Basically, it is the worry that one might be missing an opportunity for social interaction, a novel experience, or some other satisfying event.

African young businessman standing on a wall with a tabletBritish psychologist Andrew Przybylski led a study which found that the less people felt autonomy, competence and connectedness in their daily lives, the more they felt FOMO. People high in FOMO were also heavy users of social networks, which provide constant opportunity to compare one’s status with those of others, and to make sure that you are having as much fun and excitement as you perceive that others are having. Once a chronic ailment among only young people, FOMO is quickly spreading to older folks as well.

FOMO manifests itself in many ways. A young professional might be worried that he might miss an important email from the boss and jeapordize his career. A teen is fretful that another party is better than the one she’s attending. Millions of people caught up on unwatched seasons of Breaking Bad during the two weeks leading up to the concluding episode (resulting in record business for Netflix) just so they could experience the series finale in real time with millions of others.

Implications for Retailers

The growing incidence of FOMO presents tremendous opportunity for retailers. As a result of too many stores and websites selling too much stuff that people don’t really need, retailers have honed the practice of stuffing merchandise down consumers’ throats to a fine art. So far, most of the stuffing has been accomplished at the expense of gross margin. Sales, price promotions, coupons, BOGOs and GWPS are the price of entry these days (If you don’t believe that, ask JCPenney.) Even though these day-in, day-out promotions have resulted in rampant price deflation and declining retail sales growth rates, retailers can’t stop, because consumers are hooked.

Stocksy_txpc2f8e6f7nw1000_Small_56421In his new book Bargain Fever, Mark Ellwood reveals that sale shopping has an impact on consumers similar to the one heroin has on an addict. It stimulates the production of dopamine, a neurotransmitter that controls the pleasure center of the brain. According to Ellwood, a quarter of us are literally addicted to sales. However, these jolts of dopamine become less effective as time goes on. Like the drug addict, we need bigger and better promotions to get the same effect.

Eventually, once a 50%-off sale fails to drive additional traffic or increase sales, retailers will have to get more creative to stimulate those pleasure centers and make consumers happy. The successful brands in the next phase of our industry’s evolution will be those who create a compelling and neurologically-connecting in-store, online and mobile customer experience. They’ll use our obsession with our mobile devices to pull us into their 24/7 omnichannel world. And if those retailers are really smart, they’ll capitalize on the FOMO pandemic to engage us, connect us to their brand, and keep us buying stuff whether we need it or not. The brand promise, as customized to each of us individually, becomes irresistible in that context.

Fast-fashion giant H&M opened a huge new store in New York’s Times Square with none other than Lady Gaga cutting the ribbon. Thousands of customers lined up for as many as 30 hours before the store was set to open to get a glimpse of the superstar. Twenty customers were randomly selected to earn early access to the store and to shop with Gaga before the remaining shoppers were let in. The new store was open 24 hours on opening day, with a digital runway and countdown announcing hourly offers. The first thousand shoppers in line received a coupon valued at between $10 and $1,000, and there were giveaways galore. The opening was blasted all over social media so kids who were unable to come to New York for the event, could enjoy it on a virtual basis.

Whatever Gaga was compensated for this appearance was probably money well spent by H&M, because it did a tremendous amount to burnish brand awareness and cemented brand loyalty among core consumers. The retailer created an irresistible customer experience in the form of a one-off event, linked that event to its brand promise, and then sat back while its customers trumpeted news of it to other customers.

Two young women taking a self portraitFOMO and the Holiday Frenzy

By the time you read this, a record number of stores will have opened earlier than ever on Thanksgiving Day and Black Friday, and Cyber Monday deals will have started the day before Thanksgiving, if not earlier. Though a bump in sales was obviously one of their goals, there’s more than just a quest for market share going on here. Stores used the captive attention of consumers during this holiday season to get their brands and stores talked about.

This intersection of one-to-one marketing and consumers’ need to be engaged and in the loop will intensify and increase in sophistication, because it’s in every marketer’s best interest to connect with consumers individually, even intimately, to pre-empt competition from doing the same thing. Amazon has done this by becoming the go-to site for anything and anything we need that we don’t feel like going to a store to buy: books, toilet seat covers, cell phone chargers, toilet paper. The winners in the next phase, including Amazon, will figure out a way to capitalize on not just needs, but our desire to not miss out.

We will see an increase in stores launching limited-time-only, exclusive collections, and early releases of everything from CDs to fashions to video game consoles. We’ll see a rise in celebrities doing in-store appearances. Customers suffering from FOMO will go out of their way to participate, because people standing in line at 4:00AM feel like they’re squarely in the middle of “the place to be.”

Friends with digital tablet outdoors

Marketers were sending alerts and coupons to our smart phones while we ate Thanksgiving dinner, essentially trying to wake us up with shots of dopamine to counteract the tryptophan in the turkey. “Instead of sitting drowsily on the couch after dinner watching football with your brother-in-law,” they seemed to beckon, “Come to Best Buy and get a great deal on a Smart 3D HD TV. You don’t really need it, but hey – anyone who’s anyone will be there.”

And, if you think this is just a Thanksgiving thing, and won’t be happening next year on Christmas Day, Easter Sunday, Mother’s Day, and every day in between, I have a land bridge to the North Pole to sell you. FOMO is a real and present danger, but it’s also an opportunity. Is your brand missing out?

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