The choice monster

shutterstock_532274260Proliferation of options in consumer goods is a fact of 21st century life, but is it a good thing?
One of the exercises we occasionally ask clients to do is go and buy something in a category they know nothing about, and record how they end up navigating it. The process can be quite disconcerting, but at least you have the reassurance of knowing that you are doing an exercise, and no one will judge you if you get the wrong product. Imagine, then, how it feels when you approach a category you think you know something about, only to find the game has changed. That was the sensation that gripped me in a fairly unremarkable liquor store in suburban Boston a few weeks ago.
My mission that day was to buy some beer for pre-dinner drinks with my hosts. Simple, right? Unfortunately as anyone who has been on a beer shopping mission in the US (and increasingly, in many other countries) will attest, the category is now a riot of choice thanks to the rise of craft beer and retreat of mainstream brands like Budweiser and Miller. After 3 minutes of indecision, I noticed out of the corner of my eye another man, about the same age as me, also looking at the glass chiller cabinets with a bit of a lost expression. We exchanged wry smiles. “This used to be easy,” he sighed, and walked off, having finally made a decision.
In the Paradox of Choice, Barry Schwartz’s bestselling book on consumer behaviour, the author observes that as options multiply in a given category (let’s take beer, for argument’s sake), there comes a tipping point where the effort to distinguish between options outweighs the benefits of having those additional degrees of freedom. “The fact is that some choice is good doesn’t necessarily mean that more choice is better,” he writes.
As someone who works closely with the wine category, and enjoys the product on a regular basis, I do understand intellectually the point Schwartz is making. However, until my run-in with the beer fridge the other day, I was tempted to be a bit dismissive of consumers who don’t “get” my category. Could it be that with my industry-trained brain, I can just breeze the wine category in my local supermarket – find it enjoyable, even? The choice parameters are still huge, but I have the experience to know sufficiently what I’m looking for, and where to find it, and (by and large) what to pay for it.
It turns out that I’m not that special. Lots of wine consumers share my behaviour, none of whom have industry insider knowledge. For the past decade and a half, Wine Intelligence has been doing shopper behaviour studies, and in that time I have observed three fairly consistent findings among experienced wine shoppers:
  1. Having a “good range”, i.e. an aisle full of bottles, is actually quite reassuring to regular wine shoppers
  2. They have worked out how to navigate the aisle in their own way, maybe based on certain keywords (e.g. varietal) or maybe based on label colours or icons
  3. On “normal” shopping missions, they actually don’t spend that long in the aisle – typically 45 seconds to 1 minute, which is a lot longer than the bread aisle, but still a fairly brisk browse when you think about the hundreds of bottles of wine trying to get their attention
While these observations hold for experienced shoppers, the pattern falls to pieces when inexperienced shoppers navigate the category. Like a novice swimmer approaching the deep end for the first time, they are reluctant to even enter the aisle properly and try to spend as little time there as possible. Just as Schwartz predicted, they are overwhelmed by the choices on offer and stop processing them. The typical end-of-aisle block of discounted products is their lifeline: small amount of choice, and the reassurance of money off.
This is also reflected in quantitative data. There is a consistent correlation between inexperienced wine category shoppers and their propensity to buy wine in convenience stores versus larger supermarkets, in markets where there is a free choice between the two, such as the UK or the Netherlands. One might argue – legitimately – that this correlation arises largely because inexperienced wine shoppers tend to be young, and young people shop more in convenience than large-format retail. While I’m sure this is influential, the fact that convenience channel offers a relatively small choice  (generally quite clearly ranged), must also be an attraction for someone who doesn’t want to spend ages choosing between 20 options of sparkling wine or 8 Pinot Grigios.
Which brings me back to beer. Having been for decades a relatively simple choice (perhaps a boring choice, if we’re being critical), the explosion of options in the beer category over a relatively short period of time has been highly disruptive to consumers – and indeed the supply chain generally. Distributors in the US are struggling to adapt their systems to cope with keeping 50 or 100 SKUs in stock rather than 10; consumers are having to retrain themselves to juggle an average of 12 brands in their portfolio (according to research recently published by Heineken in the US), compared to probably 2 or 3 two decades ago.
The jury is out on whether the craft revolution is good or bad news for the beer category. On the one hand, beer prices are going up, according to an investment report published by Goldman Sachs this past July; on the other hand, the same Goldman Sachs report talks of a fall-off in participation in the beer category among 35-44 year olds, as wine, spirits and – in states where legalised or decriminalised – cannabis is taking more share of wallet. Are there any lessons for wine? Perhaps that large-scale disruptive innovation can actually put consumers off – in the same way that you curse your regular grocery store when it decides to re-organise its layout.
Author: Richard Halstead

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