Why are consumer goods companies reducing their portfolios and why do retailers seem to be overhauling their category merchandising and range assortments? Well, in part it’s down to too much choice.
Effective shopper marketing relies on brutal simplicity to cut through the clutter, while being reductive and choiceful about the message that is most likely to tip the balance and motivate shoppers to buy. The same should apply to the number of products on offer, but this is rarely the case.
In fact one of the biggest barriers to purchase at shelf (as we all know from personal experience) is ‘choice confusion.’ G2 recently did some research for a client who makes a well known line of toothbrushes in Mexico and witnessed a lady get so frustrated trying to choose the best toothbrush and decipher the jargon printed on the pack, she actually threw the toothbrush on the floor and stormed out of the aisle. And it’s a similar story in a category like nappies. Retailers often reward sleep deprived, first-time mums who feel overwhelmed, vulnerable and unsure by presenting them with a wall of nappies laden with indistinguishable ‘bells and whistles’ – just to make them feel even more stupid and ill-equipped to decide what’s best their babies! Choice confusion can be incredibly stressful.
And if you’re a devil for the detail, a retailer recently announced that it had reduced unique SKUs by 18-22%, resulting in sales increases of 6-12%, improved returns of 9%, and improved GMROI of more than 9%.
Retailers have always tended to flex the value equation (price x convenience x choice x innovation \ product quality or performance) in lots of different ways to reflect their own brand positioning and commercial objectives but this still tends to create unnecessary complexity for the shopper. The fundamental paradox is that the number of trips and products bought to stock up the pantry is decreasing while the number of product line innovations and assortments still seems to be trending in the opposite direction.
Deals and not choice is the main driver in the decision-making process. Research by the Symphony IRI Group in the US suggests that the weaker economy has caused shoppers to drop pantry stocking by 25%, removing ‘nice to have’ items while purchasing on a ‘needs must’ basis much closer to consumption, as well as paydays. One shopper said on CNN Money ‘When it comes to grocery shopping, if it isn’t on sale, I’m not buying it’. Deals erode brand commitment but they are instant, tangible and telegraphic and we’ve spent billions training shoppers to notice and respond to them.
What is quite interesting though is how the deal mentality is shifting into the planning and searching phase of the purchase decision journey, online or via mobile, rather than during the buying phase in store and this is particularly true in more involved categories such as travel, automotive, insurance and consumer electronics. By 2020 we’ll all be connecting at speeds of around one gigabyte per second – that’s more than 500 times faster than today, and with the advent of predictive marketing based on historic purchasing data from the likes of loyalty card schemes etc. shoppers aren’t going to want to spend too much time hanging around in front of the shelf making choices.
And yet on the whole we still insist on making shoppers trudge around pre-fabricated mazes, bombarding them with daily deals that feed the need and dull the senses, arranged into meaningless categories that bear no resemblance to how groceries are planned, prepared or consumed. In an increasingly multi-channel world, understanding who buys what, where and how and the type of experience they need, is going to dictate where shoppers choose to shop and which retailers stand to lose out.
