Dr. Sheena Iyengar is the famous jam researcher. In the mid-'90s while a doctoral student in social psychology at Stanford University, she and her colleague, Mark Leper, studied jam sales at an upscale grocer. When offering customers a sample of jam, decidedly more customers bought jam when offered fewer choices rather than more.
In this study, six choices beat out 24 choices. Although more customers shopped when more choices were available, 10 times more sales were made when the customer was offered fewer choices.
This counter-intuitive result -- that "less is more" when merchandising -- has since been confirmed by numerous studies by Iyengar and other researchers. More importantly, large and small companies have applied this principle with great results:
• Trader Joe's is the gourmet food seller that provides a limited selection of items, less than 10 percent of a typical grocer. TJ's has a cult following and enjoys more than twice per square foot sales of the average grocer.
• SaraLee reduced its number of products by more than half and achieved a reduction of inventory of almost 40 percent while improving on-time deliveries.
• Best Cellars, a growing wine merchant, sells only 100 wines that are organized into eight categories to help the time-pressed find a great bottle of wine.
By simplifying, a virtuous cycle of savings may be reaped -- both financially and environmentally -- since underperforming products waste money and natural resources.
Fewer products improve the entire supply chain by eliminating excess shelf space, avoiding mark-downs and cutting inventory at the distribution center. At a macro level, sacrificing some products to achieve more sales per item also consolidates transportation and reduces manufacturing.
Why More Choice Leads to Less Sales
In her recent book, The Art of Choosing, Iyengar points out that many categories are organized to serve the "expert buyer."
An expert buyer has the knowledge and experience to categorize the multitude of offerings. She quickly gets to a short list of items that best satisfy her needs. The jam expert would focus on her interest, such as berry jam and would ignore the citrus, summer stone, tropical, and other fruit categories.
When a buyer is not a category expert or has no desire to become one, the buyer is overwhelmed by too many choices. Iyengar states that between five to nine choices is ideal. When confronted with more choices, the buyer often postpones the decision.
Next page: How to provide more appealing choices