Every hour, in every corner of the country, Americans face a number of difficult decisions. Is it more important to protect your teeth from cavities or from tartar? What is the difference between cool mint and fresh mint? A gel, a liquid gel or a paste?
“I’ve seen people on their cell phones, calling their significant other, saying, ‘Okay—what exact variety of toothpaste did you want?’” laughs Susan Broniarczyk, a professor of marketing at The University of Texas at Austin’s McCombs School of Business.
When it comes to consumers overwhelmed by too many options, Broniarczyk understands their predicament well. The average American supermarket now stocks more than 30,000 different products, three times as many as 30 years ago.
Consumers have more product categories to choose from, more offerings within categories, even more kinds of stores, from mom-and-pop shops to super warehouses. The profusion of options may be wearing them out.
Marketers have a name for this new shopping environment: “consumer hyperchoice.” According to research done by Broniarczyk and McCombs School marketing colleagues Dr. Leigh McAlister and Dr. Wayne Hoyer, shopping in such an environment can lead to frustration, fatigue and regret.
In 2004, Broniarczyk took up the topic from a wider social perspective in a paper on “the deleterious effects of living in consumer hyperchoice,” co-authored with Dr. David Glen Mick and Dr. Jonathan Haidt of the University of Virginia.
Broniarczyk described hyperchoice as “an ever-increasing amount of buying [which] occurs amidst an ever-increasing amount of new products, brands and brand extensions, in the midst of an ever-increasing amount of other daily demands and an ever-decreasing amount of discretionary time.”
As a marketing researcher, she understands the phenomenon. As a social critic, she does not view it positively.
“It is true that the more options that are out there, there is a greater chance that you can find a product that is exactly perfect for you,” says Broniarczyk, “but there’s a cost-benefit tradeoff that goes on that most consumers aren’t aware of.”
The impact of item reduction
When consumers face a large selection of items, they have to process a large amount of information, which can cause problems. People worry so much about buying the wrong item that they may opt out of the whole arduous decision-making process by not buying anything at all. Or, when they do buy something, foregone options linger in memory, causing post-purchase regret.
Broniarczyk, Hoyer and McAlister first attracted attention to problems of hyperchoice in 1998 with a study on grocery store assortments. Their paper in the Journal of Marketing Research was titled innocently enough: “Consumers’ Perceptions of the Assortment Offered in a Grocery Category: The Impact of Item Reduction.” But it was a bombshell for the industry, concluding that grocers should not be so wary of reducing the number of distinct stockkeeping units (SKUs) on their shelves—in fact, maybe they should embrace the idea.
This argument was controversial in grocery circles because retailers have long assumed that consumers want as much variety as possible. Just last month, when Fortune magazine named Wegmans grocery store the best company to work for in America, it cited the chain’s “vast selection” as one reason for its success: “Each of the newer Wegmans stores is 130,000 square feet—three times the size of a typical supermarket. That means it can offer true one-stop shopping for every taste.”
Retailers have good reason to believe a large selection is important. Consumers consistently identify assortment as one of their top three criteria (along with price and location) in deciding where to shop.
As a result, traditional grocers have continued to pursue large assortments even though carrying smaller selections might enable them to compete more nimbly with big-block stores like Wal-Mart.
Wal-Mart itself is an interesting case. Though famous for low prices and operating efficiency, Wal-Mart also appeals to consumers by limiting product choices. Rather than wasting space in their warehouses with slow-moving items, Wal-Mart fills its capacious shelves with more facings of a smaller number of units.
The idea is to save money on inventory costs. At the same time, says Broniarczyk, and without any conscious intent on the chain’s part, Wal-Mart’s parsimonious approach to assortment helps customers by reducing the stress of decision-making.
“You might have a whole aisle of laundry detergent to pick from, but if you actually look at it, they’re only offering three or four brands and two or three types per brand. In a typical supermarket, on the other hand, they might be offering 10 brands of laundry detergent and four or five types per brand,” she says. “At Wal-Mart, within a given category, your choices are actually fairly simple.”
For the insights in their 1998 paper on into item reduction, Broniarczyk, Hoyer and McAlister received one of the most prestigious research prizes in marketing, the O’Dell Award.
Colleagues at other universities have corroborated their results. In 2000, for example, Sheena Iyengar of Columbia University and Mark Lepper of Stanford University published research showing consumers are more likely to approach a display with numerous products, but more likely to actually buy something if there are fewer options.
Meanwhile, item reduction has gained traction with industry, and manufacturers are starting to focus on streamlining their product assortment.
As an example, McAlister cites Ziploc bags. After years of introducing incremental variations on the general idea of a disposable, resealable bag, “the Ziploc bag people have rationalized their assortment.” For example, they phased out some of the less popular sizes.
“I must have been in the minority wanting that half-gallon bag,” adds McAlister sadly.
It all began in a Piggly Wiggly
The contemporary shopping experience traces its roots to the grocery store, itself a comparatively recent development. Historically, customers relayed their shopping list directly to a grocer, who gathered the requested items. But with the 1916 debut of the Tennessee-based Piggly Wiggly, customers strolled the aisles themselves and were able to linger over their decisions.
Customers, in effect, became shoppers.
After World War II, shoppers encountered a growing array of options. Mass production made consumer goods easier and cheaper to produce. Innovations in media, most obviously the invention of television, made it possible for producers to spread the word about their products to a broad audience. And with the national standard of living on the rise, consumers were able to buy more.
Concurrently, the more ascetic tendencies of our Puritan forebears had gone the way of the Puritans. As Americans moved from our theocratic heritage towards a more secular society, we embraced an ideology of consumption. Broniarczyk calls this “the imperative of consumer choice.”
These considerations enabled what McAlister, in her 1997 book “Grocery Revolution: A New Focus on the Consumer” (co-authored by Barbara Khan of the University of Pennsylvania’s Wharton School), described as “the mind-numbing over-proliferation of ‘new’ product offerings.”
The struggle for shelf space
One of the reasons for this over-proliferation is the classic marketing strategy of brand management. For years, this practice has resulted in brand managers establishing their reputations by rolling out a succession of short-lived sub-brands, from Crystal Pepsi to Frito-Lay’s WOW! chips.
McAlister and Hoyer had long suspected that brand management led to shelves cluttered with too many unwanted products. They thought a better approach would be category management, which calls for product assortment to be driven by consumers. They took up the issue with a focus on convenience stores.
Working with corporate partners, including Frito-Lay and Philip Morris, the professors and their MBA students began to analyze the situation. They examined several months’ worth of scanner data from area convenience stores. For five categories—salty snacks, cigarettes, candy, soda and beer—they identified which particular SKUs were the most and least popular.
The results, says Hoyer, were eye-opening.
“We found that many SKUs were selling fewer than two units a month,” says Hoyer. “They were just taking up space. If you come in for something and they’re out of stock, that’s a huge negative for retailers. They’re out of a sale and you’re going to go somewhere else. Efficient assortment would suggest that you take out some of those slow-selling items.”
The MBA students devised an aggressive category management plan for two local Diamond Shamrock stores, which called for a 42 percent reduction in the number of items carried by each store.
For the next month, the team monitored sales at both stores. At the first store, sales went up 8 percent. At the second, the manager was so tied to conventional marketing that she tried to sabotage the experiment. In spite of her best efforts, sales rose 2 percent.
“That may not sound like much, but in retail, a 2 percent jump is huge, and 8 percent is really huge,” notes Hoyer. Also, exit surveys revealed that customers had a better experience in the stores after their options were simplified.
Less is more
Additional studies since then have confirmed that consumers often appreciate less choice, not more, even though both retailers and consumers tend to assume the opposite.
“It’s a two-edged sword,” McAlister says. “People want the broader selection, but once they get it, they’re overwhelmed.”
Having too many choices, she adds, contributes to buyer's remorse.
“People who choose from a big set,” she says, “tend to feel more regret afterwards. It’s a fascinating side of the human mind.”
But isn’t it American to have more choices, more options, more freedom? It surely is. And today, even if our consumption ideology has not already conquered consumers worldwide, it appears poised to sweep the globe.
In light of Broniarczyk’s own words on the subject, this may not be America’s greatest contribution to world freedom.
“[T]he consumer activities of ordering an obligatory holiday gift, replacing outdated telecommunication technology and indulging in a new pair of fashionable shoes, in between a 25-minute stop at the grocery story for $104 of weekly sustenance, may not contribute as much to quality of life as once thought or hoped for,” she says.
In other words, the perfect tube of toothpaste may keep your teeth blindingly white and protected from all cavities. But knowing that the first option will probably work out just fine—now, that’s something to smile about.
McCombs School of Business
Photo of Dr. Hoyer and banner graphic photo: Mark S. Rutkowski