Narrow the range, increase retail sales

It’s counter-intuitive, but less choice, fewer options and a smaller range of products can often help increase retail sales and customer satisfaction. Who would have guessed?

Simplified, narrower product ranges are contributing to accelerated customer and corporate purchase decisions, improved productivity, velocity and volume, and, interestingly, fewer instances of buyer remorse.

Marks & Spencer in Britain has taken the plunge, being rewarded with enhanced performance outcomes. It simply followed the lead of several coffee lounge networks there that introduced a singular, standardised “medium”-sized cup of coffee, regardless of whether a customer wanted a latte, cappuccino, macchiato or something else. Some fast-food outlets are following suit with a single-size burger.

Consumer responses have been overwhelmingly positive – queues at the ordering counters have shortened and the speed of service improved. There has been some resistance, though. Custom has been lost to those who prefer smaller or larger options.

However, that leakage in sales was not because of the fewer choices, but rather a disagreement with the single choice imposed by management. There is little evidence of long-term brand damage or negative sentiment about quality or value.

Fulfils demand

Simplifying the buying process has long been valued by customers as it fulfils the demand for convenience. Moreover, the policy can be an effective means in the market positioning of brands, companies, products, services or applications. Importantly, it can be, and has proven to be, an effective way to differentiate between competitors and substitutes.

Single-brand motor vehicle dealerships consistently attain and maintain higher key performance measures than multi-brand outlets. That is important in an industry where much of the “shopping” is done online, with the average time spent on the forecourt of a new-vehicle dealership by intending purchasers being as little as 46 minutes. One outlet visitation is now the industry norm.

Making the buying process easier is often rewarded with typically higher conversion rates and volumes. Narrowing the range of throat lozenges from an average nine to just three at the pay consoles of service stations did not discerningly affect sales. Moreover, the sales from the freed-up space with alternative products were attractively high.

Hardware, electrical appliance and toy retailer references to having and promoting the biggest range is seldom attractive to an individual whose needs will usually be fulfilled by one product, service or application – the right, specific product they have visited the store to purchase.

Choice is, and should be, a measured and subjective assessment based on research, intelligence, judgement and experience.

Attractive proposition

Astute business owners and managers are taking the risk of narrowing stock ranges, brands and sizes. They are tolerating some leakage of revenue, but welcoming the increase in profits, customer satisfaction, productivity, velocity and volume.

The measurement of stock turns is an established monitor of business efficiency. Sadly, too many people in retail are unaware of the principle, and therefore do not monitor and quantify sales and profits performance.

Narrowing and simplifying choice, appropriately applied, can reduce inventory, shrinkage, insurance premiums, logistics costs and capital-servicing expenses. All round, it is an attractive proposition.

Fear of the possibility of losses in marginal and incremental sales to isolated and tertiary customer groups can, and does, induce inertia. Decisions have consequences – good and bad, upside and downside. Those seeking to service and satisfy heighten their chances of failure. The alternative is to identify, isolate, analyse and relate to choice customers and choice clients. Most have narrow and specific preferences.

• Barry Urquhart runs Marketing Focus in Perth, Australia, and is a business strategist, consumer behaviour analyst and keynote speaker. He can be contacted at [email protected].