Reducing Choice, Increasing Revenue

According to the Toronto Globe and Mail, some major retailers and consumer product companies are experimenting* with reducing the choices they offer. The results are often positive:

Several months ago Wal-Mart  Canada Corp. decided to overhaul one of the staples of its grocery business – the peanut butter aisle.

It 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.

“Folks can get overwhelmed with too much variety,” said Duncan Mac Naughton, chief merchandising officer at Wal-Mart in Mississauga. “With too many choices, they actually don’t buy.”

… 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.

* An executive at Costco who read the same article told me this:

Costco has been “experimenting” with limiting the number of items in our warehouses for over 30 years.  We carry no more than 4,000 items in comparison to a Wal-Mart or Fred Meyer, which may carry 120,000.   So when we stop carrying someone’s favorite item (White Cheddar Popcorn or Pickled Asparagus), we aren’t trying to offend them — we are just audacious enough to want to make MORE MONEY.

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One thought on “Reducing Choice, Increasing Revenue”

  1. I like this idea, it makes sense. If you need peanut butter you are not going to forego buying peanut butter simply because there are fewer choices, you will still buy the peanut butter. It would make grocery shopping a lot easier with fewer choices that is for sure.

    The Green Guerilla

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