A Blog by Jonathan Low


Jun 29, 2020

Why Covid-Era Consumers Are Facing Fewer Choices - And Embracing It

The behavioral economics of Covid-era consumption have taught retailers and consumer product companies - from food to toilet paper to clothes - that their customers are ok with fewer choices. They don't want to linger in stores, nor will they necessarily pay more for greater choice in a recession.

And that may well be the more efficient and profitable strategy in the future. JL

Annie Gasparro and colleagues report in the Wall Street Journal:

The Covid-19 impact has shown that “we may not need 40 different choices of toilet paper.” Consumer companies spent decades trying to please everyone. The pandemic made that impossible, and now some no longer plan to try. Variety in some categories, such as baby care, bakery and meat, fell 30% in the pandemic. Varieties slowed production too much relative to their popularity. (And) consumers welcome fewer options. “We used to see people pacing the aisles and reading labels. Now people are saying, ‘I need to get in and get out.’ ”
Some IGA Inc. grocery stores now offer only four choices of toilet paper. A few months ago, before the coronavirus pandemic, IGA’s 1,100 U.S. stores typically carried about 40 varieties.
Harley-Davidson Inc. has cut some models from its motorcycle lineup. Outback Steakhouse has stripped roughly 40% of its menu, is studying whether customers care and may drop some items for good even after the pandemic.
Consumer-oriented companies spent the past decades trying to please just about everyone. The pandemic made that impossible, and now some no longer plan to try. Sellers of potato chips, cars, meals and more have been narrowing offerings since the coronavirus snarled supply chains and coaxed consumers back to familiar brands.
Some executives said they plan to stick with fewer choices when the pandemic fades, saying it forced them to reconsider whether American consumers need such vast choices that sometimes overburden factories and stores.
The Covid-19 impact has shown that retailers and consumer-goods manufacturers were “addicted” to endless varieties, said IGA Chief Executive John Ross: “We may not need 40 different choices of toilet paper.”
In grocery stores, the average number of different items sold was down 7.3% over the four weeks ended June 13, said Morgan Seybert, a director of analytics at market-research firm Nielsen. The variety in some categories, such as baby care, bakery and meat, fell as much as 30% earlier in the pandemic. Executives at Kraft Heinz Co., Coca-Cola Co., Hershey Co. and other food giants have said they are trimming less-efficient and less-profitable products, while shelving some in development.
Steven Williams, CEO of PepsiCo Inc.’s North America foods business, said the company stopped producing a fifth of its products during the Covid-19 crisis, including lightly salted Lay’s potato chips. He said he and his colleagues spoke with grocery executives as the pandemic deepened, determining that PepsiCo should focus on its fastest-selling products.
PepsiCo is starting to bring some items back, but Mr. Williams said he expects its Frito-Lay snacks business to emerge from the pandemic with 3% to 5% fewer products. The company is taking the opportunity to discontinue some items that have few fans or are complicated to produce, he said, making its factories and distribution network more efficient. “There were some no-regret moves,” he said.
For years, companies added choices. Executives told investors that, by putting a token salad on every fast-food chain menu or stocking a detergent for extra-sensitive skin, they could cater to the whims of more people in a family or group of friends or co-workers. Over the past 45 years, Lay’s has gone to 60 varieties of chips from four. Since 1984, Campbell Soup Co. has quadrupled the types of soup it sells to about 400.
Those efforts helped consumer-goods makers claim more shelf space as retail stores and supermarkets expanded into big-box stores and warehouse clubs. In 2018, the average U.S. food retailer stocked about 33,000 different items, compared with roughly 9,000 in 1975, according to the Food Industry Association. Walmart Inc.’s Supercenters typically stock 120,000 items.
A strategy of offering less choice was contrarian, espoused by outliers like German discounter Aldi when it boosted its U.S. presence in 2017.
But as panic buying in March cleared supermarket shelves of staples, retail executives fretted over how fast they could replenish supplies. Retailers and food companies over the past several months have convened calls on which they decided food makers should cut back on options, streamline supply chains and concentrate production on the most-demanded goods, said CEO Mark Smucker of jam maker J.M. Smucker Co. In response, he said, Smucker paused production of reduced-fat Jif peanut butter and reduced-sugar Uncrustables frozen peanut-butter-and-jelly sandwiches.
Bolthouse Farms CEO Jeff Dunn said he reduced the variety of baby carrots it makes to four from more than a dozen. “We were all keeping up with the surge in demand by simplifying. Buckling down and taking care of basics and not worrying about all the bells and whistles,” he said. He plans to bring some back eventually, but not all.
Nestlé SA is permanently dropping some Lean Cuisines varieties, partly because they slowed production too much relative to their popularity—a phasing-out that was accelerated by the pandemic—said North America President John Carmichael. Some of the frozen meals may come back, he said, and Nestlé’s food scientists are developing products to potentially launch in 2021. “People like variety,” he said.
IGA over the past few months has sharply reduced its variety of toilet paper and other items, said Mr. Ross, the CEO. Unpredictability among suppliers was one factor, he said.

Toilet-paper demand early in the pandemic led paper-products company Georgia-Pacific LLC to switch all production of its Quilted Northern toilet paper to 328-sheet rolls; it had been also producing the brand in 164-sheet rolls. The company, owned by Koch Industries Inc., said it plans to stick with the bigger rolls even after the pandemic, which let it speed production and make distribution more efficient. Retailers had an easier time keeping Northern toilet paper in stock by having fewer varieties on shelves.
“We’re making more than we used to in a shorter period of time,” said Jim Hannan, executive vice president for Koch in charge of Georgia-Pacific. “It’s more important that the market is being simplified.”
Restaurants are thinning menus as Covid-19 changes how they can seat and serve customers. For years, eateries used new menu items to attract customers. Those often required chains to buy more ingredients and train employees, while complicating customer ordering.
Darden Restaurants Inc. said it was going to largely keep slimmed-down menus it started during the pandemic, which have helped reduce prep work and costs. The owner of Olive Garden and other chains said it would bring back only a few menu items that were removed, and executives said the trend was a rare upside of the pandemic on its business.
McDonald’s Corp. told franchise owners this month it would keep dozens of items, including salads and bagels, off U.S. menus for now, though could bring back some later. Owners are lobbying to also keep all-day breakfast offerings off the menu, items that boosted sales but complicated operations. “While our competitors grapple with supply chain issues, we are delivering blazing fast service,” the National Owners Association, a McDonald’s franchisee group, wrote in a letter to owners this month.
McDonald’s executives told owners that the company was still evaluating all-day breakfast and that average U.S. drive-through wait times have fallen by 25 seconds, in part because of the leaner menu.
Shelving ChoicesMakers of food, beverages and householdproducts have cut varieties to be moreefficient.Percentage change in the number ofdifferent items sold at U.S. supermarketsSource: NielsenNote: For the four weeks ended June 13, comparedwith the same period the prior year.
Baby careTobacco andalternativesFrozengoodsHouseholdcareDeliTotal StoreMeatSeafoodHealth andbeauty careDairyBakeryDry goods*AlcoholPet careProduce-12%-9-6-30
Outback Steakhouse owner Bloomin’ Brands Inc. stripped menu items including a wedge salad and French onion soup during the pandemic as the chain built up a to-go business centered on its steak and other entrees. Bloomin’ CEO David Deno said they are studying customer reaction and whether to drop some items permanently.
Wingstop Inc., one of the few restaurant chains to post same-store sales growth after the pandemic hit, has added only three flavors to its chicken meals in nearly 26 years. The limited menu has made for smoother service and helped boost pandemic-era sales volumes, said CEO Charlie Morrison: “It eliminates having to be all things to all people.”
Last year, auto makers built and offered more than 605,000 vehicle configurations even before taking different colors into account, according to industry research firm J.D. Power. In auto showrooms today, U.S. buyers will likely find choices more limited for now because of supply-chain bottlenecks and lower volumes, said Doug Betts, president of the firm’s automotive division.
Items such as hand-sewn-leather steering-wheel covers are in shorter supply, as factories distance workers, said Mr. Betts. That has forced car companies to allocate now-scarcer parts to models they believe will sell more quickly and at higher margins, he said.
George Waikem II, treasurer of the Waikem Auto Family group of dealerships in Ohio, said he expects a truncated list of options such as all-wheel drive on cars he can order. “I don’t have high hopes to be able to get what I need,” he said. “It’s going to be like, ‘These are the parts we’ve got on our shelves, do you want them or not?’ ”
Harley-Davidson told its dealers last month that about 70% of them won’t receive additional motorcycle shipments for the remainder of the year. It isn’t making as many models as before, focusing on bestsellers as it steers away from an expensive plan to roll out dozens of new models. Harley said it expects to reveal more about the strategy during its July earnings call.
Consumer choice in meat aisles has narrowed as Covid-19 outbreaks among meatpacking-plant workers in late April forced meatpackers like Tyson Foods Inc., JBS USA Holdings Inc. and Cargill Inc. to temporarily shut plants and allocate workers to lines producing more basic products, meat-company executives have said.
The result in grocery stores has been more bone-in hams and chicken breasts with ribs attached that require less hands-on cutting in plants. Though meat plants have resumed operations, many workers have continued to stay home. “Right now,” said Will Sawyer, economist for agricultural lender CoBank, “the processors are more focused on supply than they are the convenience.”
Some coronavirus-fatigued consumers welcome fewer options, say companies like Deschutes Brewery in Bend, Ore. It had planned a limited-release peach lager for Pride Week in local bars and stores but nixed that plan. It will keep its new and experimental beers limited to its own taprooms and offer its best-known brands for broader distribution, said Neal Stewart, vice president of sales and marketing.
“We used to see people pacing the aisles and reading labels…that treasure hunt of finding the exact right beverage,” he said. “Now people are saying, ‘I need to get in and I need to get out.’ ”
Tuna company Bumble Bee Foods LLC this spring cut some flavored tuna pouches to prioritize cans that sold faster as shoppers stocked up. It also decided with retailers to push back planned product launches up to six months. Bumble Bee plans to bring back some of the cut items but probably not all, said Chief Growth Officer Todd Putman, as tuna is an overcrowded aisle.
For now, he said, “Consumers aren’t ready to try new things yet.”


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