Monday, February 15, 2010

Maybe only a few dozen...

If you have ever paused to wonder when looking down the breakfast cereal of cracker aisle in the supermarket if such extravagance of choice is economically efficient, you may have sensed a future trend. Maybe we're going to have our choices narrowed somewhat.
Wal-Mart is not the only one doing this, according to Dibadj. He says leading drug store chains, including CVS and Walgreens, grocers such as Kroger (KR, Fortune 500), and Wal-Mart's rival discounter, Target (TGT, Fortune 500), are also looking to simplify their store shelves.
In good economic times, product variety is a must for retailers. But in down times, when shoppers aren't buying much, variety can be a burden.
"Wal-Mart's a little fed up," said Lora Cecera, retail expert and partner at strategy consulting firm Altimeter Group. "I think the feeling is that as these companies keep extending their [product] lines, it's only causing confusion for shoppers and not really driving them to buy more products."
As a consumer, she asked, "Do I really need to decide between 15 different types of toothpaste when I go to a store?"
Dawn Willoughby, vice president-general manager of Glad brand for the Clorox Co. (CLX, Fortune 500), agreed.
"On an industry level, we've been talking about simplifying product assortment for a long time," said Willoughby. "If you walk into a Wal-Mart or another large retail chain, there are so many products on shelves that it does make it harder to shop."


I think in part this could be a response to a buying public more starkly defined by income. As income inequality increases, Wal-Mart especially has fewer takers for slightly higher-end products.  And as the article points out, more (and essentially identical) choices make shopping harder.
So, a little bit of Psychology, to fuzz up your day, specifically the psychology of choice and of happiness. Two gentlemen, Barry Schwartz and Dan Gilbert, have made these topics more accessible via their TED talks last year. To summarize and synthesize the two: The more choice we have, the less happy we are. When we do get choices, we don’t use them well, and when we make mistakes, we rationalize them to ourselves, but still we worry that we didn’t do the right thing. [More]
Wal-Mart may think it is rationalizing shelf space and profits, but what it could be doing is helping customers enjoy their experience in the store by eliminating a subtle source of stress.  Happier customers spend more.


Anonymous said...

I noticed that very thing the other day about Laundry detergent. Its a joke how many choices. But, there is a large difference in cost per load. I suspect that in dog food you get what you pay for, but Laundry detergent?

One of my tenants bought some generic Roundup look alike for $10 a gallon. Others are not even "shopping"? I think $9.00 beans have made some of us a little lazy. I think we need some more resistant weeds to sharpen these guys up again!

Anonymous said...

I am looking at this from the shopping perspective and in some ways genetics for livestock.

I like to have the choice of simular brands in part as it brings competition of same type products and forces those products to distinguish themselves through advertising or EPDs.

Since I hardly ever shop at Walmart, I do not have to be upset with what they offer. But, I have started going to on-line stores to find what is no longer carried locally at clothing stores, bookstores, farm supplies, etc. and genetics -- I think people must have time on their hands as it is hard to find animals who walk right on their feet and they must have there hooves trimmed regularly. I don't have time for that, but I do have time to shop for what I want in an animal through the internet.

Choice is good and if people are confused then you are not making your brand stand out or what you think should make your product stand out is not that important to the consumer.

For years companies have used product change to add to shelving space to crowd out the new/little guy/regional product -- try and find a RC with Coke and Pepsi and their product families. But it has helped other products like cooking oils -- we now have olive, walnut, peanut, grape, etc. and most of those started with smaller companies.

What Walmart is doing is pushing more jobs overseas so common items can be cheaper at their stores to keep customers. It is what they did to vaccume cleaners back in the early 90's. Now they are so cheap you buy them every few years and it really does not matter what the brand is or from which store.

Walmart is trying to program people to not think; just buy. Their desire for cheap has created a cheap consumer and basically ended many jobs starting with the repairman.