Cut Products, Boost Sales
I’ve written about some of the research that shows that shoppers don’t always respond positively to a bigger selection of products (see More Choices, Fewer Sales) and extreme product/brand proliferation (see Mega-Branding: The Purple Oreo Problem). Now, retailers are implementing the concept of reducing selection in their stores and finding that it can indeed increase sales.
[Wal-Mart] dropped two of its five lines of peanut butter to free up scarce shelf space for cinnamon spreads. But the decision didn’t cost the retailer a single jar in sales. With fewer selections to browse, customers wound up purchasing more than before…
P&G, maker of Tide detergent and Ivory soap, recently reduced the number of its soap and other skin care offerings by about one-third at one retailer, while cutting the array of detergents and other fabric care products by about 20 per cent at another chain.
Following the cutbacks, sales grew in each category. “In the skin care example, shoppers reported they felt that they had more choices because the selection on the shelf was clearer,” spokeswoman Jennifer Chelune said. [From The Globe and Mail – In store aisles, less is more but customers can still be particular by Marina Strauss.]
Of course, slashing selection isn’t a panacea. Sometimes, low volume products have devoted followers. Strauss reports that supermarket chain Loblaw ended up reinstating many products it cut after customers complained. Wal-Mart, too, restocked items when they found customers were going to other stores to purchase them. And in one project a store found that increasing the selection of yogurt boosted sales.
Still, this trend could spell doom for Purple Oreos. Will they be missed?
I could think of some products where a wide variety is needed: wines, beer, mustard and spices. Or perhaps it’s just me thinking from the shoes of the consumer…
I agree, Darius. I enjoy leisurely shopping for wine, and I expect the store to have a wide variety. Still, I think it would be interesting for a store to test a small wine selection to determine the impact on sales. To prevent being perceived as not being serious about wine (which would be my assumption if I visited a store and they had under 10 Cabernet Sauvignon brands vs. over 100), they might have to enhance the display. Showing tasting notes, expert ratings, etc. might help, as might having a visibly large quantity of each on the shelf. Since even wines made from the same grape vary immensely, it might be necessary to position the choices: a few very inexpensive Cabs, a few moderately priced but highly rated ones, and a few upscale choices, for example.
Great move on Wal-mart and P&G’s part. Generally, it does make sense to only give customers a controlled amount of choices. I think that having too much of one thing has a tendency to overwhelm the senses. Giving customers too many options, in a sense, devalues what your selling. You remove a product’s distinctiveness by making it just part of a mass of other choices.
Of course, there should also be some exceptions to this. I guess, the “Purple Oreo Problem” is just similar to being served too much sushi or chocolate. A lot of us like them and there’s an unending variety to both. However, when these chocolates and sushi are laid right in front of you at your table, in all shapes and sizes and flavors, there’s no guarantee you’re going to eat everything. You can only take on so much. There comes a point when you just have to step back and say you’ve had enough.
Thanks for this highly interesting post, Roger! Looking forward to reading even more from you.
For many years I have said that too many choices in stores has added to our stress levels. I believe its a huge time sucker, eating up our time and most of us don’t even realize it. I wonder how many hours per year are lost to deciding which deodorant would make my our armpits the smoothest or looking for the just right paper towel product?!
And yet, I have experienced some frustration this week in looking for a hair color product that I have used for years. What, they get us addicted and then pull it all away? Kind of like the whole “credit” thing?!
That’s the exact dilemma retailers face, Donna. Everyone would agree that most stores stock way too many brands of shampoo, hand soap, etc. BUT, if the consumer’s preferred variety disappears, the consumer won’t always switch to a similar product that is on the shelf. The consumer may complain, and, worst of all, decide to look for the product in another store.
Interestingly, I market for a professional haircare retailer. I find that sometimes the product ranging on a particular brand aren’t customer lead but supplier lead.
A supplier will bring in a new line of 12 products so the retailer, if they offer a “power assortment” strategy, need to stock the line to have a full range. They “sell” the units to the retailer, not the customer. They don’t care if it sells with the customer in the long term because they have just had a massive order to retailers for millions of dollars. The development cost is very small.
So they WIN by selling new lines to retailers. The side effect of this is that old lines tend to get culled or just sit of the shelf and don’t sell.
This is a very interesting conumdrum. There are a large number of documented studies which show that a reduced range can result in a sales uplift. Of particular note is a study by Prof Sheena Iyengar where a range of jam was manipulated to this effect. My feeling is that the degree to which such an effect is evident is very much dependent on the level and way in which the shopper engages with the category. In a category such as wine, for many shoppers the act of purchase and consumption is almost a past-time, as such shoppers seek out an experience and expect to be stimulated in a process of discovery. In other categories (or other situations) where for instance the purchase is not necessary or a prerequiste of the shopping trip too much choice can indeed lead to the shopper giving up. Some of my work on decision making in supermarkets has pointed towards a shopper undertaking a process of elimination when it comes to product selection. If there are too many products to eliminate, be that consciously or subconsciously then the process becomes too complex and or time consuming. Understanding how shoppers approach your cateogry and how core the purchase is to the shopping trip is therefore important in understanding the degree to which a wide assortment is necessary. Once you’ve established this and if then you deem a reduced assortment to be a viable tactic then you must consider which lines to keep and which to delist. To acheive this and maintain sales you then need to understand the percieved similarities and substitutabilities between product lines so that you can manage the assortment without impacting reach.