The Retail Management Advisors, Inc. logo


People love to have options. Many will tell you that they seek out the stores that give them the most choices. Initially, more choices are equated with more control. It's intuitive. The idea is that with more choices comes more satisfaction and happiness. But this 'intuitive' assumption is one of life's little deceptions. Realistically, the more options a customer has, the less likely he or she is to make a decision at all. Today lives are abundantly full of choices. Almost anything, even those unique, personalized items, are readily available. But this wealth of choices can become so overwhelming that it leaves a business drowning in excess and out-dated inventory and worse, dissatisfied customers.

Psychologically when customers have too many choices the fear of making the wrong choice cannot be ignored. A recent article in Entrepreneur Magazineexplains it like this:

This [too many choices] can be translated into simple math-when there are only two options, we have a 50 percent chance of choosing the 'right' one. But when there are five options, our chances suddenly decrease to 20 percent. Matters become even more complicated when there are 20 options or more. Human cognitive ability cannot efficiently compare more than five options, so most of us will start looking at the first few options and then stop. Awareness that there may be a better option triggers the urge to find it. However, due to time constraints and human cognitive limitations, we are unable to engage in the elaborate thought process required to compare and contrast all of the available alternatives.

Too many choices also affect the choice criteria, expanding it to infinity. A customer enters a menswear store and asks for a pair of ready-made, dark dress slacks. He is shown pants that are slim-fit and wide leg, flat-front and pleated, with and without cuffs, slash and slit pockets, lined and unlined, in a variety of fabrics and colors-well you see what I mean. Faced with too many choices, how can that customer choose? What should he choose? Which pair of dark slacks will be the best for him and leave him feeling pleased about his choice?

This is when a knowledgeable sales person is invaluable. Before he shows the customer anything, he can ask questions to help narrow down, or curate, the choices for the customer. Then he can show the customer choices that has what the customer wants. This curatorial process is often the difference between a sale to a satisfied customer and an unhappy, empty-handed customer leaving the store.

Generally, three choices are recommended but not more than 5. Five choices give the customer an 80% chance of choosing the wrong thing, only a 20% success rate. As a general rule, people only value an abundance of choice during the information-gathering phase of the buying process. Neuropsychologist Susan Weinschenk suggests "resisting the impulse to provide lots and lots of choices to your customers. Remember they will SAY they want lots of choices, and you will think that lots of choices is a good thing (because you like them too), but too many choices means they won't buy at all." According to Dr. Weinschenk, it is human nature to want more choices and information than one can actually process.

Most have heard of the famous jelly test in a California gourmet market. Professor Iyengar and her research assistants set up a booth of samples of Wilkin & Sons jams. Every few hours, they switched from offering a selection of 24 jams to a group of six jams. On average, customers tasted only two jams, regardless of the size of the assortment, and each one received a coupon good for $1 off one Wilkin & Sons jam.

Here's the interesting part.Sixty percent of customers were drawn to the large assortment, while only 40 percent stopped by the small one. But 30 percent of the people who had sampled from the small assortment decided to buy jam,while only 3 percent of those confronted with the two dozen jams purchased a jar.

That study "raised the hypothesis that the presence of choice might be appealing as a theory, but in reality, people might find more choice to actually be debilitating." Over the years, versions of the jam study have been conducted using all sorts of subjects, from chocolate to speed dating.

The inability to make the sale results in outdated excess merchandise or greater than planned markdowns to move this excess merchandise. In other words, the end result is a lack of profitability.

Customers expect businesses to "curate" choices for them although they will never say that. It is of utmost importance to know your customer. You cannot stock enough of any one item to please everyone, so know your customer and be the best you can be for your customers. Knowing your customer helps you decide what information to give as the curative process begins, the type of expertise and how much importance is assigned to each choice. As a retail store, choice is important but do not plan for too many choices as this encourages excess inventory and dissatisfied customers. Use an Open-To-Buy. There is no need to purchase and stock enough merchandise to fill your store for more than a season because styles and colors change in everything (you have heard of planned obsolescence). Never buy more than you have planned to sell. Your store is not a "field of dreams;" it is a business.

If there is an abundance of excess inventory in your store, proper use of Open-To-Buy can help eliminate the problem in many cases. It cannot eliminate poor merchandise selections that do not fit the customer profile, but it can help cut down on excess.

Follow Us On Facebook  LinkedIn