How much choice is too much?
Apparently, for Coca-Cola, this involves about 400 different types of drinks.
That’s why the drinks company recently decided to discontinue half of them, cutting brands like Tab, Zico coconut water, Diet Coke Fiesty Cherry and Odwalla juices, but still leaving about 200 others to choose from.
It’s a move other companies are also taking, narrowing the variety of offerings, from mayonnaise to breakfast cereals to cars, and instead focusing on what they think will sell best.
Stew Leonard’s, a grocery chain with stores in Connecticut, New York and New Jersey, now has 24 flavors or varieties of breakfast cereal, up from 49 in 2019. Edgewell Personal Care Co., the maker of Schick blazers and Banana Boat suntan lotion, has among more specific variants of its antibacterial wipes Wet Ones cropped. And Dollar General, based in Goodlettsville, Tenn., used to have six different types of mayonnaise on its shelves and now wants to drop some.
“Consumers won’t know the difference,” Dollar General CEO Todd J. Vasos told analysts in December. “Actually, it will make her life a little easier if she goes to the plank.”
Just a year ago, Kohl’s store in Clifton, New Jersey had high tables with sweaters and shirts in a rainbow of colors, as well as clothing racks stocked with a wide range of styles. Now it takes a more edited approach: Tables have thin stacks of knit shirts focused on fewer colors, and many clothing racks have been pared down to just three or four styles.
Under new CEO Tom Kingsbury, Kohl’s has cut back on the colors and variations of sweaters, jeans and other items, while sending their shoppers to the New York market more often to offer fresh, trendy merchandise.
“We went out and we bought a lot of goods and it came in 12, 14 months later, and it didn’t perform very well,” Kingsbury told analysts on a November call. “We will use the marketplace so that we can respond quickly to the business and respond to trends.”
Some customers are happy with the changes so far.
“It’s pretty organized,” said Kimberly Ribeiro, 30, who was at the Kohl’s store last Friday. “If it’s not so messy, you don’t get overwhelmed.”
Even in the car world, consumers find less choice. Both General Motors and Ford have touted how they are limiting the number of option combinations customers can get on their vehicles to reduce production and purchasing complexity.
That’s a turnaround from just a few years ago, when there was an explosion of choices, spurred in part by online shopping that ignored space limitations. But that didn’t always lead to sales, so companies started pruning selections a year or two before the pandemic.
During the pandemic, the pruning only accelerated, with companies focusing on the necessities while grappling with supply chain blockages. But even after the pandemic, when goods could move freely again, many companies decided less was better and justified the limited selection by claiming shoppers didn’t want as much choice. It’s also more profitable for businesses because they don’t take as many leftovers that need to be discounted.
Overall, new items accounted for about 2% of products in stores in categories like beauty, footwear, technology and toys in 2023, up from 5% of items in 2019, says market research firm Circana.
Eric O’Toole, president of Edgewell’s North American division, noted that the pandemic provided “a really valuable impetus” for reassessing the lineup.
“We avoid responding to fads because the supply chain and retailer costs involved in getting them onto the shelves usually don’t yield a return in the end,” O’Toole said. “A tighter, better-constructed portfolio supports healthy earnings management. ”
Many think that they are also doing shoppers a favor. Research shows that fewer choices, and not much variety, actually encourages shoppers to buy more.
In 2000, psychologists Sheena Lyengar and Mark Lepper published a study showing that a limited selection is better for consumers. In their experiment, Lyengar and Lepper found that consumers were ten times more likely to purchase jam from the display when the number of jams available was reduced from 24 to 6, even though they were more likely to stop at the display with more choice. Subsequent studies have confirmed this phenomenon.
“Retailers recognize that they must be respectful of shoppers’ time,” said Paco Underhill, whose company Envirosell studies consumer behavior.
Still, retailers can’t simply cut their products, says David Berliner, who heads the corporate restructuring and turnaround practice at BDO.
“You want to make these cuts so they don’t even notice, and you want the store to still look full,” Berliner said. “If you do it too often, you might scare some people away.”
Berliner also believes that reducing variety could also hurt smaller brands that rely on retailers to offer different products — and send shoppers like Brian Friedman to other competitors.
The 49-year-old communications consultant from Little Falls, New Jersey said his favorite barbecue sauce for years has been Open Pit. But Friedman noticed his local grocers were out of it in recent years, and he’s since turned to Amazon to buy it. That means those local stores not only missed out on Open Pit sales to Friedman, but also all the other purchases he made while shopping for his favorite barbecue sauce.
“I really don’t like the idea of a retailer telling me what I should and shouldn’t be interested in,” Friedman said. “I like change. I like specific brands.”