TOO MANY DECISIONS

American culture often celebrates choice in all its glorious forms. The idea that customers want lots of choices is American Retail Gospel.  This philosophy is perhaps best illustrated best at The Cheesecake Factory, though when I encounter that menu, I admit, I get overwhelmed.  The question I ask myself is what a surplus of choices does for the vendor-customer relationship and retails sales.  Whenever I ask horticulture industry people to list the competitive advantages of independent garden centers  versus box stores, they offer roughly the same group of benefits: Quality, choice and service are most often listed. Box store efficiency needs tends to reduce the overall product diversity and focus with the standard big box philosophy of  “pile it high and sell it low” like Costco.  

At the garden center, just between Impatiens and Pansy, to take two of the most popular flowering plants,  there are definitely more colors than necessary for any one garden center – or garden. In fact, plant breeders introduce hundreds of new varieties each year just in these two species alone.  The need for a huge number of choices has turned the average garden center into a paint-chip department, with every color and form to satisfy every potential aesthetic whim – even for the customers that haven’t walked in the door yet.  Is the need to be all things to all people impacting sales for the people who are already in the store?  

Choices, Choices Everywhere and No Decision in Sight

With nightmares of the choice-eating zombie haunting my sleep, I’m beginning to wonder if a bit of buyer-restraint would be a good thing in many boutique and high-end retail settings. I like watch people shop and see how customers process the abundance of choice.  My favorite venues for this sort of curiosity-based creeping are garden centers, wine stores and marijuana dispensaries.  All three tend to have a lot of confused and overwhelmed customers working hard to process too much information. 

 My kids won’t go into a garden center with me because I end up helping one person and then five others start asking me questions.  Two hours later, I leave the place having forgotten what I went for in the first place but feeling happy that I guided so many people away from the wrong plant and towards the right ones. 

If the average garden center customer makes 85 percent of purchasing decisions on impulse and the vast majority of wine buying is based on how the label looks,  then how much control do we have over that process? What sort of factors influence decisions at the retail level and how can we optimize those for our benefit.  Quality of displays, store organization, staff training would be among them, surely, but enough has been said (and ignored) on those subjects that I will leave them for another time. Instead, why don’t we consider this notion: Too much choice is hurting our sales. As Human psychology tells us –  the confused mind says “no”.

Jam-packed.

Sheena Iyengar, a professor at Columbia University who studies the effect of choice on behavior, provides some interesting research into the benefits – and costs – of choice. The study I found particularly interesting looked at consumer behavior at a gourmet grocery store. This particular store stocks 250 varieties of mustard and 75 different olive oils and 300 jams. That sounded sufficiently like a garden center, wine store or dispensary assortment to me.  With too many Hosta, Pinot Grigio or Cookies strains, it seemed there was something to be learned here.  

This particular store reflected in the study catered to people who said they liked lots of choice and variety. In the experiment Dr. Iyengar and her team conducted, two different displays of the same brand of specialty jams were set up. Each display was staffed by two people acting as store employees and offering customers samples of as many jams as they’d like to try. The customers were given a coupon for $1 off any of the jams from the display; the coupons were used to track sales after the interaction.

The first display had a “Limited Choice” of six jams, and the second had an “Extensive Choice” of 24. The two most popular and least popular flavors were determined ahead of time and were thrown out, so the choices the customers had were not of the “I need some grape jelly” sort. The two displays were then alternated hourly across several non-holiday weekends so that traffic flow was even.

Just as I expected, the larger “Extensive Choice” display attracted more attention. Of the 242 people who passed by the larger display, 60 percent stopped to sample and inspect the jams. On the “Limited Choice” display, 260 people passed by, but only 40 percent stopped to sample. Both groups tasted, on average, one to two samples before being given their coupon. How the customers spent their money ultimately was quite a surprise. 

Of the people who looked at the “Limited Choice” options, 30 percent bought one, but the larger group of people shopping the “Extensive Choice” display were far less motivated – only three percent purchased. Based on the figures the study gave, each jar of jam cost an average of $5, so that means all the “Extensive Choice” model gave the store was $15 in sales, while “Limited Choice” brought in $93 in revenue.

Choice can be crippling. It is clear from the study that too many choices – though they can create enthusiasm and activity initially – actually serve to dampen motivation to buy as the consumer becomes overwhelmed with too many options. The numbers seem consequential when applied to the bottom line of any large retail setting. Does the sheer number of plant varieties available to the average woman looking for a shrub for a foundation planting or color for some tired patio containers overwhelm her? Does a relatively new user of Cannabis buy the variety that is the most common – and thus the least profitable for the dispensary –  because better and/or more profitable strains often blur together and confuse him to he reverts to what he knows? Santa Margarita Pinot Grigio is the most over-rated and over-priced Pinot Grigio among Italian white wines. But its also the most well-known – so people pass over many better varietals and grab what they know because they are confused and can’t make a decision.  And when you’re confused and overwhelmed you go to what you know or have heard of.  

Less Choice is More

The tightening of choice options available in a retail setting appear to increase sales. Narrower inventory, larger displays, and time-focused promotions are all ways of creating a retail environment that offers a faster and easier shopping experience with less dithering over a decision.  A retail merchandising specialist I worked with believed strongly that the cycle of merchandising (changes in displays) substantially affects the customer visit cycle. It’s a way of managing customer expectations. The same would apply to product availability.  At a dispensary, cycling in and out some old school favorites as well as the “latest and greatest” could help contribute to more regular visits by the best customers and a more efficient shopping experience. An increase in the number of people that can move through a limited retail space while increasing the average sale and reducing the need for costly customer-staff interaction can drive retail profitability higher by getting more from your existing customers.  As the customer gets more sophisticated and products become more widely available, the retailers that make shopping efficient and easy to navigate are the ones that will best survive the onslaught of e-commerce giants and big retailers.  

Leave a Reply

Your email address will not be published. Required fields are marked *