The power of consumer habit: why businesses often struggle to expand overseas
Conor Wynn explains why Bunnings’ failed UK expansion is an example of the power of consumer habit in this crossposting from The Conversation.
One of the reasons why some companies fail in their expansions, whether ANZ in Asia, or Starbucks and Woolworths in Australia, is that their business models don’t sufficiently account for differences in consumers’ habits.
Research shows that over time consumers build up habits. These habits influence what people buy, when and where. For example, in a study of transport options one of the biggest predictors of whether people chose to drive was how much of a habit driving had been.
That is why simply copying and pasting what works in one location (such as a huge hardware warehouse) without adjusting for local circumstances (different competitors, services and customer preferences) is very risky.
Australian hardware chain Bunnings is just one example of a company struggling to cope with entrenched customer habits, as more than A$1 billion has been written off its recent expansion into the United Kingdom.
