“Where people are faced with so many choices that they can’t decide among them and make no choice at all.” – Ulf Bockenholt
As a retail manager, you know customers can become overwhelmed with too many options when browsing your store. This phenomenon is known as “choice paralysis,” which can harm sales. However, by understanding the underlying cause of choice paralysis and implementing measures to reduce it, you can ensure that your retail business attracts more customers who enjoy their shopping experience. This blog discusses why “choice paralysis” occurs and how brick-and-mortar retailers can best avoid it.
Choice Paralysis in the Retail Industry
Choice paralysis is the indecision that occurs when shoppers are presented with an overwhelming number of product options. The phenomenon causes stress levels to elevate, impairing an individual’s ability to make sound purchasing decisions.
Note: choice paralysis is also known as choice overload, over-choice, or the paradox of choice.
Why does choice paralysis occur?
The underlying problem that paralyzes a shopper from acting is the fear of choosing the wrong product or an inferior product. Research shows that shoppers experiencing choice paralysis, experience a wide range of negative emotions, from frustration and confusion to regret and dissatisfaction. This occurs due to an inability to evaluate the utility of the available product options.
A study by Deloitte found that the inability to choose between options is the result of cognitive overload and mental fatigue, consider the following:
“The human brain simply isn’t designed to process and compare the sheer amount of information it is often given… Without ways to mentally manage or weigh the value of information, people struggle to decide and freeze.”
So, when a shopper is presented with too many choices, people attempt to compare and contrast all the possible outcomes. This results in high levels of stress and frustration-based indecision.
What about Analysis Paralysis?
Similar to choice paralysis, analysis paralysis describes the process wherein shoppers overanalyze or overthink a situation preventing forward momentum or decision-making from taking place. In short, the decision maker (cognitively) loses the ability to decide or act within a reasonable timeframe. Although slightly different from paralysis of choice, analysis paralysis has the same impact on shoppers when presented with too many options – they become paralyzed.
Too Many Options Can Lower Sales Conversion Rates
A grocery store in California ran an experiment to better understand choice paralysis. For the experiment, researchers set up a jam display. During the course of the experiment, on some days, the booth would display six flavors of jam, while on other days, the grocer offered 24 flavors. The study found the following:
- 4% Sales conversion rate on days when the store offered 24 flavors of jam.
- 31% Sales conversion rate when the grocery store offered only six flavors of jam
The grocery store experiment shows the problem and the solution to decision paralysis. However, the study also found that persuading shoppers to accept a reduction in choice is challenging. Too few options leave shoppers feeling as though they are not receiving the best value for their money.
What is the right amount of product choices?
The answer is, it depends on the product and the target customer. Moreover, most consumer studies have found that people enjoy having options while shopping but prefer fewer options to more. Business Insider, recommends 8 to 15 choices. But notes that, too few choices can make consumers feel they are missing out on value.
In contrast, Forbes writes that: ”… the magic number of choices to be 2 or 3, but no more. If a salesperson offers a customer more than one item, it demonstrates that the salesperson is an expert in the product and has actively listened to the customer’s needs.” Therefore, the answer is subjective and context-dependent. But, staff and management can help with choice paralysis.
Even in instances where consumers have made a purchasing decision, analysis paralysis exhausts the decision maker to the extent that they do not have the energy to buy the item and carry out the transaction. Therefore, by reducing product offerings to shoppers increases the likelihood that they will make a purchase. Beyond a certain assortment size, too many options result indecision and lost sales opportunities.
Tips to Prevent Choice Paralysis at Your Retail Business
Know your customer
Understanding the buying styles and patterns of your target audience provides hints at how many options they may prefer. For example, convenience (store) products are often bought in a hurry. Thus, it is helpful for the customer if the retailer provides only basic choices of a given product range to speed up the decision making process.
Take the time to watch your customers interact with your product displays. Do they look paralyzed?
Review sales data to determine which products are bestsellers.
Review existing product offerings: first, determine a criterion (metric) to help reduce product-line offerings, for example, a minimum profit margin. Next, assess product lines that offer over eight options using retail point-of-sale (POS) data and remove product lines that do not meet the minimum criteria. This process aims to determine which products sell well and which do not.
Focus on Offering Bestsellers.
Once managers understand which items sell well and which do not, they can decide which products should be discontinued and which should remain on display. The reduction in product options and focusing on bestsellers simplifies the customer decision-making process and increases sales conversion rates.
Limit Choice Offerings for Each Product type or Range.
Consider making it a policy to have a minimum and a maximum number of product offers in each product line or range.
Train employees to help customers make confident purchasing decisions.
Train employees to assist customers in the decision-making process. Employees with a solid grasp of product knowledge can help shoppers filter through the options and make good purchasing decisions. Further, proactive employees who seek out confused or paralyzed shoppers will help improve the overall customer experience.
Simplify and declutter shelves, product displays, and presentations.
Eliminating clutter and maintaining a logically organized store reduces consumer stress and confusion and helps shoppers find what they need, make selections, and complete purchases.
“People don’t make decisions based on what’s the most important, but based on what’s the easiest to evaluate.” –Barry Schwartz, psychology professor
Choice paralysis is a complicated and nuanced phenomenon that brick-and-mortar retailers must understand and take into account if they want to create a compelling shopping experience for customers. By taking necessary steps to minimize choice paralysis, such as reducing the number of choices available, clearly labeling categories, and highlighting essential products, you can ensure that customers in your store will have an enjoyable and successful shopping experience. Although choice paralysis can initially seem daunting, you now have the right tools to avoid it. With this newfound knowledge, you are equipped to create a positive environment for your retail business.
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