Fewer Consumer Choices; Good or Bad for the Toy Industry?

Supermarkets, mass-merchandisers, and e-commerce giants like Amazon have made their marks by offering low prices, speedy delivery, and a broad array of choices. Though the first two, low cost and speedy delivery, are not going anywhere soon, choice may be at the beginning of a decline. That’s according to a Wall Street Journal article by Suzanne Kapner entitled, “Retailers Cut Back on Choices; We Don’t Need Three Types of Red.”

According to Kapner, some retailers are cutting back on the number of choices they are offering. The reasons: Logistical challenges and a public that is getting overwhelmed by the sheer number of options they face when shopping. Ms. Kapner writes: “The wider the assortment, the more confused the customer is,” Bed Bath & Beyond Inc. Chief Executive Mark Tritton said in an interview. “Customers want something that is digestible. They want retailers to edit down the choices.”

Ms. Kapner goes on to quote Sheena Iyengar, a Columbia Professor, who has conducted consumer studies. She found “that people bought more jam when they were shown fewer choices. Only 3% of consumers who were shown 24 types of jams made a purchase. The purchase rate increased to nearly 30% when consumers were shown just six varieties.”

I have to admit that I find this type of thinking to be counter-intuitive. It would seem that the more variety, the more sales. Let’s say, however,  that this theory that reducing choice is good for business is correct. Does it matter to us in the toy industry?

Consumer expert Sheena Iyengar thinks it does. She states that reducing choice works no matter whether you are “selling clothing, financial products, food, or just about anything else.”

If that is correct, reducing choice could be a challenge for the toy industry. Will mass merchandisers decide that they don’t need to offer as many character licenses? Will they reduce the variety of dolls, action figures, cars, and trucks? Will retailers ask toy companies to cut back on the variety of colors and styles they offer? And of course, there is this concern: Will retailers decide that they don’t need as many vendors?

The toy industry is not as vulnerable to the reduced choice movement as other commodities. Still, I am going to keep my eye on this concept. It could have consequences down the road.

Leave a Reply