Experience Design, Retail and the Paradox of Choice: Why I Buy Peanut Butter at Trader Joe’s

Experience Design (aka XD or ED) is a subfield of design that focuses on the creating the broader experience of using a product/service/space/process, rather than narrowly focusing on its functional features. An experience designer considers the larger social and cultural context surrounding the design object, the design object’s meaning to its user, and the emotional relationship created in the experience between a brand and its customers.

One element of Experience Design in retail is the burden of choice experienced by the shopper. Ever spent hours on Amazon.com only to double the size of your Wish List but not make a single purchase?  Or debated which movie to rent with your boyfriend/girlfriend for so long that you have now learned to stick to the newest episode of Mad Men, just to keep decisions from consuming half of your “relaxing” evening at home?  (I’ve done both.)

Aisle, by Thomas Hawk on Flickr

Shoppers love choice, but if you want to convert browsers into buyers, you must beware of providing too many options.  Why? Because too much choice can lead to indecision, stress, dissatisfaction with ones’ final choices, or anticipated regret during the decision making process. It can also lead to poor decisions, such as deciding not to invest in an employer-matched retirement fund – the equivalent of turning away free money.

This phenomenon, called the “paradox of choice“, has been researched by psychologists including Sheena Iyengar, Barry Schwartz, and Reneta Salecl. (My own research looks at how generating too many ideas leads to choice overload in the design process. Too much freedom can kill creativity, but moderate constraints support creativity, such as a clear problem definition or a project mission statement.)

Trader Joe’s, a grocery store chain with a cult-like customer base, seems to have found the balance between offering enough choice to entice, but avoiding overloading shoppers with too many options. I’ve always loved this about TJ’s – the choice burden is removed for me, because choices are limited and I trust their buyers’ judgment to pre-select the best products for me. (It’s not the only admirable aspect of the TJ’s shopping experience, but it’s an important one.)

recent Fortune article describes the business benefits of limiting the variety of products, including cost savings, operational simplicity, and increased product turnover:

Make no mistake: A typical family couldn’t do all its shopping at the store. There’s no baby food, toothpicks, or other necessities. But for this crowd of urbanites and college kids, Trader Joe’s is nirvana.

A closer look at its selection of items underscores the brilliance of Coulombe’s limited-selection, high-turnover model. Take peanut butter. Trader Joe’s sells 10 varieties. That might sound like a lot, but most supermarkets sell about 40 SKUs. For simplicity’s sake, say both a typical supermarket and a Trader Joe’s sell 40 jars a week. Trader Joe’s would sell an average of four of each type, while the supermarket might sell only one. With the greater turnover on a smaller number of items, Trader Joe’s can buy large quantities and secure deep discounts. And it makes the whole business — from stocking shelves to checking out customers — much simpler.

Swapping selection for value turns out not to be much of a tradeoff. Customers may think they want variety, but in reality too many options can lead to shopping paralysis. “People are worried they’ll regret the choice they made,” says Barry Schwartz, a Swarthmore professor and author of The Paradox of Choice. “People don’t want to feel they made a mistake.” Studies have found that buyers enjoy purchases more if they know the pool of options isn’t quite so large. Trader Joe’s organic creamy unsalted peanut butter will be more satisfying if there are only nine other peanut butters a shopper might have purchased instead of 39. Having a wide selection may help get customers in the store, but it won’t increase the chances they’ll buy. (It also explains why so often people are on their cellphones at the supermarket asking their significant other which detergent to get.) “It takes them out of the purchasing process and puts them into a decision-making process,” explains Stew Leonard Jr., CEO of grocer Stew Leonard’s, which also subscribes to the “less is more” mantra.

Customers accept that Trader Joe’s has only two kinds of pudding or one kind of polenta because they trust that those few items will be very good. “If they’re going to get behind only one jar of Greek olives, then they’re sure as heck going to make sure it’s the most fabulous jar of Greek olives they can find for the price.”

P.S. Thanks to my hubbie @royrosenthal for passing this along!  We sooo miss our beloved TJ’s since moving from San Francisco to London.  The #1 question our Bay Area friends ask when they visit us is “is there a Trader Joe’s near here?” I wish! But there are many more markets to chose from…