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Most retailers would agree that offering customers a wide variety of choices to pick from either in the store or on the website is a good thing. However as with many things in life there can be too much of a good thing. That is where Barry Schwartz’s 2014 book The Paradox of Choice comes in. Schwartz’s book explains how “too much of a good thing can prove detrimental to our psychological and emotional well-being.” In other words when the offering or assortment is too great and there is too much from which to choose the choices become overwhelming and result in customers actually being less satisfied.
Example
Here’s a great example. Think of how many television channels you subscribe to. For most subscription services this can range from 250-450 different viewing options. Even when you remove the foreign language and shopping networks the choice is overwhelming. Then add Netflix Hulu and all of the other options you have access to and you can shoot the entire evening simply trying to decide what to watch. Often this can lead to frustration and lack of satisfaction with the choice you ended up making. How many times have you gotten 5-10 minutes into a program that you thought looked interesting only to start the entire process over again?
[Sidenote: Some may remember when the number of television choices was exactly three…ABC NBC CBS].
In-Store Experience
The same thing can happen in your store. Unless the assortment plan is carefully monitored it’s possible your customer could become overwhelmed with choices and end up buying less. Have you ever shown a customer several styles of jeans sandals or you name it only to hear them say “do you have anything else?” or “is that all you have?” only to end up leaving without purchasing anything? I am sure we have all been in stores or visited websites that have left us confused overwhelmed and frustrated to the point that we leave.
Without purchasing anything. Talk about counterproductive! Stores that are continuously overbought often have this problem. In an effort to offer more choices (read lack of buying plan or a “shotgun” approach to buying) too many vendors and styles are carried. This can lead to over-assortment and duplication with the end result being either too many markdowns or worse yet reduced inventory turnover and restricted cash flow. In other words due to the merchant’s inability to make a proper selection the store ends up with a whole lot of nothing!
Think for a second about the challenges that this presents from a merchandising perspective. The negative ramifications of this strategy are numerous. They range from deciding how to artfully present the different options to monitoring the reorders and fill-ins in a timely fashion. I have a technique that is useful when this situation arises. It’s called a model stock.
This is how you might utilize the model stock approach to inventory management:
1. Take any given category as this works for almost anything. Let’s use socks. Pretend you were given an opportunity to open another location. You now have a blank slate from which to build your assortment.
2. Let’s assume you have an OTB of my keyword0000 @ cost. For illustration purposes this will give you an average retail inventory of roughly $20000 given a 50% IMU (example only and IMU’s for socks are generally higher).
3. You plan to turn socks three times annually so your anticipated sales will be $60000. Now decide what vendors styles sizes colors price points you need to cover and extend out your purchases on a spreadsheet.
4. Just remember all of your purchases must fit into the $20000 maximum retail inventory. Once you are satisfied that everything is in balance and the model covers all of your merchandising objectives for this category compare it to what you currently have in the existing store. Most likely you…
Streamlining Your Inventory
You will find styles sizes and vendors that need to be filled in. You might also find vendors you have discontinued styles that have been around too long broken sizes and bad colors. Immediately mark down the merchandise that exists outside of your model and use that money to reorder the items you need.
This simple and effective strategy will enable you to streamline your assortment plan and sell more with less. Should you need further help on building a model stock feel free to reach out. I will be happy to help you.
About the Author
Ritchie Sayner is with Advanced Retail Strategies LLC an affiliate of Management One. Sayner’s book Retail Revelations: Strategies for Improving Sales Margins and Turnover (2nd Ed.) is available on Amazon. He can be reached at advancedretailstrategies.com.
Publication Information
Paradox of Choice: Why Less Is More
Ritchie Sayner
Published in the September/October 2021 issue of Shoe Retailing Today Copyright © 2021 National Shoe Retailers Association Tucson AZ www.nsra.org. All rights reserved.
Summary
The article discusses Barry Schwartz’s concept of the “Paradox of Choice” highlighting how excessive options can overwhelm consumers leading to dissatisfaction both in retail settings and everyday decisions like choosing a TV show. It emphasizes the importance of managing inventory effectively to avoid overwhelming customers and suggests using a model stock approach to streamline inventory and enhance sales efficiency.
“Too much of a good thing can prove detrimental to our psychological and emotional well-being.”
Real-World Examples of the Paradox of Choice
The concept of the Paradox of Choice as explained by Barry Schwartz can be observed in various real-world scenarios. Here are a few examples illustrating how overwhelming choices can lead to decreased satisfaction and decision-making challenges.
- Online Shopping: Many e-commerce platforms offer an extensive range of products from electronics to clothing. While this variety can be appealing it often leads to decision fatigue as customers struggle to choose among hundreds of similar items. This can result in abandoned carts or dissatisfaction with the purchase.
- Restaurant Menus: Some restaurants provide an extensive menu with numerous options which can overwhelm diners. This may lead to longer decision times and a less enjoyable dining experience as customers second-guess their choices or feel they might have missed out on a better option.
- App Stores: With millions of apps available for download users can find it challenging to decide which app best suits their needs. This abundance of choice can lead to users downloading multiple apps to try them out only to feel dissatisfied or confused about which one to use regularly.
