Thought Leadership - Sharing insights

November 15, 2017

Choice overload in category management – less is more

You’ve heard the saying less is more, never has this been truer than when deciding on the size of a range and the choice available to the shopper.

For most companies this is counter-intuitive, believing that a large range will mean that they will achieve more sales, but research has proven that this is not always the case and in fact, reducing range can increase sales.

Consider your category, just how much choice does the consumer want? For some categories, this is an important factor, but for some more commoditised categories it is not. Sugar is a good example. In the UK, granulated sugar is usually supplied by one supplier to a retailer, as the choice is deemed to not be important. For ‘added value’ products there may be more than one supplier.

And then just how many choices do you need? In the 90’s Procter and Gamble reduced the number of Head and Shoulders varieties by nearly half, (eliminating the least popular) and saw sales increase.

You may have come across the ‘jam study’ conducted in 2000, by psychologists Sheena Iyengar and Mark Lepper. Over the course of two days, they ran a sampling table in Draegars. Day one there were 24 varieties of gourmet jam on display and on day two only six varieties on display. On both days the shoppers received a coupon for $1 if they sampled the jam. The large display attracted more interest than the small one, but what they found was that the people who saw the large display were one-tenth as likely to buy as people who saw the small display – 30% of shoppers who had a choice of 6 jams purchased v 3% when they had a choice of 24.

There is a fear that in the store the supplier will lose shelf space if the range is reduced. In a previous life, we reduced the range in a large supermarket by 25%, opened up the facings of the remaining SKUs and sales increased. The insight that had led to this action was comparing SKU density on shelf and conversion to purchase. Shoppers told us that they couldn’t ‘see’ products and we noticed that out of stocks were high as stock on the shelf couldn’t be maintained and so shoppers couldn’t always buy what they wanted.

Clear category segmentation has a role to play in helping shoppers and improving conversion. Blocking products with similar attributes (defined by consumers and validated by shoppers), helps shoppers to find what they want and make a choice across similar products.

It has also been proven that people’s satisfaction in their purchase can be reduced if there is too much choice, the question ‘did I make the right choice’ is raised and actually it can lead to paralysis, a case of ‘can’t see the wood for the trees’.

The counter to all of this is of course personalisation. You only have to go to a coffee shop to see how choice is key – skinny or not, decaf or not, extra hot, extra milk…

The overall takeout from this exercise is to understand how important choice is for your category. Having products in stock (assuming they are the right ones), has got to be more important than lots of choices, but no stock on the shelf.

So next time your buyer says they want to reduce range, it may not be a bad thing.

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