How retailers can address the paradox of choice

How retailers can address the paradox of choice

How retailers can address the paradox of choice

2 August 2019

There is an age-old debate in retail which pits two diametrically opposed ideas against each other: on the one hand, the idea that offering a wide choice of products enables customers to find something that meets their specific needs. On the other hand, too much choice leads to clutter, complexity and overall a painful shopping experience. How do retailers find the right balance to provide a good shopping experience?

Shopping as self-expression

The arguments for the first position – call it the “individualisation argument” – start from the assumption that different customers, generally all being different from each other in various ways, would benefit from a more tailored solution to their specific problem. One customer has sensitive teeth, another wants fresh breath; one would like 2 servings, another 4 servings; and so on. In this scenario, more choice offers advantages for some and few if any disadvantages for others. The more options there are, the more likely you are to find a product with the right combination of attributes to suit your taste and budget.

Choice also encourages innovation and experimentation which would seem to be a long-term benefit for consumers. Ultimately until you try something, you don’t know if you’re going to like it. Through a recent study we know that consumers go through periods of “exploration” followed by long periods of “exploiting” their preferred option. Without sufficient choice, a customer’s opportunities to explore (and hence find a product that they prefer) are much curtailed.

Choice can also be regarded as enabling self-expression, which is a fundamental value in Western democracies. The idea is that the choices a consumer makes can create an identity for themselves which represents their own unique qualities and personal brand. In an age when people are urged above all to “be yourself”, it becomes almost a moral imperative for retailers to offer customers choices and ways to “stand out from the crowd” or at least validate their personal identities.

Decision paralysis and the paradox of choice

Despite these strong arguments, the idea of a “paradox of choice” – that too much choice can be a bad thing – remains relevant and still carries a lot of weight with brands, retailers, and even customers themselves. 

First, there is the obvious point that too many options can delay the customer finding the product they are looking for or indeed any product which would approximately meet their basic need. Having to scan hundreds of French cheeses in the supermarket before finding any Cheddar does not feel very customer-centric.

A subtler argument suggests that presenting too much choice accentuates various cognitive biases such as “buyer’s remorse” that a customer may experience while making a purchase.  The thinking here is that too many options prevent the customer from feeling entirely satisfied with their final choice as it probably involved some trade-offs (such as price vs convenience) which are likely to require an unreasonable amount of brain power in a busy shopping environment where shoppers are looking to shop quickly and efficiently.  

There is potentially a vicious circle where the more options, the more the customer’s brain is literally overloaded with information, more stress is created, the more customers will look to take short cuts and end up making a sub-optimal decision. One famous study published in 2000 by psychologists Sheena Iyengar and Mark Lepper discovered that customers offered 24 different types of jam were less likely to make a purchase than those offered only 6 types. In this case customers who faced greater choice were presumably driven into a kind of “decision paralysis” where making no purchase seems like the safer option.

Finally, there is the argument that beyond a certain point, choice becomes essentially vacuous. In some cases, the customer is presented with the appearance of choice but in fact many of the so-called choices are the same basic product only with a different name or wrapper. There is a memorable scene from The Simpsons showing an extreme example of this, where Homer visits the ‘Duff’ beer Factory and is shown seemingly three distinct flavours of Duff beer all supplied by the same pipe.

The worry here is that choices are being invented to “fool” the customer into thinking there is something new to explore or there is a “light” or “healthy” or “max” version of something which could bring added benefits (but the differences are imperceptible). Furthermore, such tactics are sometimes considered a conspiracy on the part of brands to increase shelf space for their products (at the expense of other brands) by artificially inflating their product count to improve their bargaining position for space.

Are customers facing information overload?

So, the Individualizer argues that greater product choice promotes freedom, self-expression, and customer self-actualisation. The more cynical consumer psychologist would claim that all these products are effectively the same, probably coming from the same factory, and making customers wade through dozens of artificial alternatives is frustrating and time-consuming for no real benefit.

The problem with the cynical argument is that it portrays the retail shopping experience as being fundamentally a challenging and stressful environment from which the customer’s job is to “escape” with a product that mostly meets their needs.

Using metaphors like the customer being “bombarded” with information reinforces the impression the customer is a victim of merchandising and promotional tactics and their only real choice is either to succumb to a blitz of competing product claims or opt-out altogether and make no purchase.

In fact, simply posing the problem as a question of what will induce the customer to make a purchase? (any purchase) already presents the customer as being at the limit of their stress tolerance, instead of a willing and active forager for information.

So, what can retailers do to make it easier for the customer to find the information necessary to make the right decision for their circumstances?

One key area is improving the flow of products in a category so that instead of being presented with 100+ alternatives all at once, the customer is presented with 5-6 binary options which together whittle down the consideration set to just a handful. This can reduce the risk of “decision fatigue” for the customer while subtly guiding them towards the product which is most likely to be right for them.

Personalised recommendations are also incredibly powerful whether in direct marketing or from a “digital assistant” who might pop up during an online shopping trip. Home Depot in the US have taken this a step further by providing a map and an in-store product location in their app such that a customer can cut through the “noise” of a vast in-store assortment and quickly locate the product they want. Imagine if your phone were to bleep or flash as you got closer to the product, or even when you walked past a promotion that an algorithm thought could be interesting to you, providing you a personalised recommendation in real time. Suddenly it feels as if the whole store is transformed into a “personalised experience”.

Perhaps most important of all is to provide choices that will truly resonate with customers. That means avoiding false dichotomies and hyped-up claims and instead investing in developing alternatives that a customer would recognise and respond to. Some of the questions a brand might consider are: Which segment does the customer belong to and what are their wider lifestyle needs? What dietary requirements do they have? Which product attributes do customers consider most important? Which products do customers consider substitutable with each other?

Neither should brands be ashamed of selling a vision as much as a reality. The cynic who argues from the fact that one toothpaste produces similar results to another that therefore most product variety is redundant, is essentially trying to reduce the customer experience to the lowest common denominator. Retaining the possibility for the customer to learn something, be inspired, or feel like they got a great deal is an essential first step for retailers and brands to delight shoppers and exceed their expectations every time they get chosen.  

 


Propositions Director, Customer Knowledge

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