Are endless aisles more trouble than they’re worth for retailers?

Discussion
Source: Target Plus
Dec 03, 2020

The pandemic has led a number of retailers and brands to rediscover their religion when it comes to SKU rationalization after many reportedly became overly tempted by the promise of endless aisles online.

“Retailers ramped up choices in recent decades as the internet created a so-called endless aisle that freed them from the space constraints of physical stores,” according to a recent article in The Wall Street Journal. “They tried to capitalize on the shift toward personalization with a desire to please everyone and added variety to tempt people to buy items they didn’t need.”

Endless aisles have been widely hyped as a way to offer a wider assortment of products that could never fit in a store. These include less-popular but cutting-edge colors and styles that often end up on sales racks at a single store but find a countrywide audience online.

Practices such as drop shipping — when online goods are shipped directly by vendors — capitalize on the potential for virtually unlimited online inventory. A main advantage often cited for online marketplaces such as Amazon is the endless choices that include products from third-party vendors.

On Target’s third-quarter conference call, Brian Cornell, CEO, said Target Plus, its third-party marketplace launched in February 2019, now offers 400,000 SKUs from 175 vendor partners. Said Mr. Cornell, “We’ll continue to make sure we curate very carefully and complement our store and online assortment.”

The Journal article highlighted how Bed Bath & Beyond, Kohl’s, PVH Corp. and Coach were among those culling SKUs. In physical stores, according to the article, eliminating SKUs can reduce clutter and keep top sellers in stock. But SKU rationalization’s benefits for both online and offline selling were said to include reducing supply chain complexities, end-of-season markdowns and “decision paralysis.”

Past research has explored how too much variety online is creating a “paradox of choice”, not only around shopping, but for online dating and social media. A survey from Zoovu, formerly Smartassistant, from 2018 found 42 percent of respondents admitting to abandoning a planned online purchase altogether because there were too many choices.

DISCUSSION QUESTIONS: Is the promise of endless aisles creating SKU proliferation challenges for retailers online? What’s the biggest pain point?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"For all but the likes of Amazon, Walmart, and Target, too much choice is, well, just too much."
"Paradox of choice creates a psychological mindset that often results in not buying at all. This is the case in physical stores but also online."
"Perhaps the non “mega retailers” should focus first on an “endless backroom,” making the full extent of their natural assortment available to anyone, anywhere."

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24 Comments on "Are endless aisles more trouble than they’re worth for retailers?"


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Neil Saunders
BrainTrust
There is a difference between offering a marketplace of products from third parties and self-selling a huge assortment. The former is more manageable, especially if shipping and handling are undertaken by the seller. Although there are issues of ensuring that service and quality are aligned. The latter is more of a challenge as it ties up capital and increases complexity. This is one of the reasons that a lot of traditional retailers, from Target to Walmart to Kroger, are opting for marketplaces to expand choice. That aside, many physical retailers should be rationalizing product choice and honing in on what customers really want. There are too many retailers – especially department stores – which seem to chuck loads of product out in the hope that some of it will sell. This shows a lack of skill and customer understanding. It doesn’t help that many stores are now too large for purpose and retailers feel the need to fill them with stock. In an ideal world, stores could be shrunk to enable more product focus. It’s… Read more »
Herb Sorensen
BrainTrust
There are many good comments in this discussion, but I call attention to: “The Misguided Bobbing of the Long Tail” – July 28, 2009 After presenting some stark data about the long tail, I will explain why it is so valuable. It is possible to have a more ideal bricks-and-mortar store with a dominant single path, with maybe a few hundred large “choices of three” displays with the Top THREE SHOPPER CHOICES interspersed along the path. See also, “How to Close Every Sale” (Commentary on Joe Girard’s book) – October 6, 2011. And notice that Joe Girard is cited by The Guinness Book of World Records as “The World’s Greatest Salesman.” The proper place for a huge long tail is unobtrusively displayed BETWEEN these “few hundred” choices of 3 displays, or even as close “side trips.” I am reminded of Stew Leonards, a long time, single dominant path store, with 1800 items achieving as much as $100 million annual sales, in a supermarket size store. I observed a Stew Leonards with a substantial liquor store… Read more »
Mark Ryski
BrainTrust

Choice is good. The problem isn’t necessarily offering a vast array of products (it has worked well for Amazon), it’s poorly curated/presented endless aisle offerings that are a problem. So presentation is one problem. Another challenge is in backend logistics of sourcing and delivering the items from a vast array of SKUs. Expanding the product offering is a good way for retailers to extend their reach and deepen relationships with customers, but how they execute is as important as offering a lot of stuff.

Jeff Weidauer
BrainTrust

Endless aisle sounds like a great idea, in theory. But the paradox of choice is real. Providing fewer choices, well-curated for the target customer, is a better strategy.

David Naumann
BrainTrust
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
6 months 12 days ago

Endless aisles do not have to result in SKU proliferation. It is really all about creating enterprise inventory availability as a way to save the sale when the product isn’t available in the store. Leveraging inventory at the warehouse and other stores doesn’t limit buying options to what is on the shelf and reduces the impact of out-of-stocks. Managing assortments and SKU proliferation is a constant balancing act to maximize sales and minimize markdowns.

Keith Anderson
BrainTrust

This is a great topic — as e-commerce has abruptly grown as a percentage of all retail, unit economics and incrementality are top of mind.

On the demand side, retailers that don’t have sophisticated search algorithms and personalization capabilities or a strong editorial/curatorial voice will increasingly frustrate shoppers.

On the supply side, as noted, the complexity is a function of how much a retailer tries to manage itself versus offloading to 3PLs and suppliers.

Peter Charness
BrainTrust

For a few “mega sites” with the scale of Amazon, Walmart, Target and very few others, huge assortments make sense as they are really online shopping malls. For most of the rest of retail, putting out a long list of products that have little to do with your brand statement is not going to be worthwhile. For one you are not going to “out Amazon, Amazon.” Secondly as others have pointed out too much choice paralyzes consumer decisions.

Perhaps the non “mega retailers” should focus first on an “endless backroom,” making the full extent of their natural assortment available to anyone, anywhere. Now the smallest store has access to the full breadth of product available anywhere in the chain. Don’t have that red in an XS at my store or city? No problem. With a well managed, single pool of inventory that is cost effectively available to any need, that red XS can move to the shopper and satisfy their purchase request.

Dave Bruno
BrainTrust

Great points well expressed, Peter. I have to say, it surprises me to see you have a passionate opinion about assortment management… ;^)

Michael La Kier
BrainTrust

Culling the herd is a natural part of life and managing the endless aisle requires just that: management. Too much of anything causes problems. A third-party marketplace approach is one thing — sourcing, managing, selling, and fulfilling an unending assortment of items is bad business. Just because you can, does not mean you should with SKU proliferation. Many CPG companies are now realizing this and pulling back on “vampire SKUs” that steal resources from the business.

Dave Wendland
BrainTrust

I love this comment, Michael: “Just because you can, does not mean you should!”

Rodger Buyvoets
BrainTrust

Paradox of choice creates a psychological mindset that often results in not buying at all. This is the case in physical stores but also online. The big difference here is that in e-commerce, there are many ways you can reduce this choice overload by providing the customer with the right tools. E.g., guided selling tools such as product finders, strong and intelligent search, intuitive product messaging, or nudging.

The pain point that arises is how to manage this if you have both an online and offline presence. But given the large amount of data available to retail brands they should still be able to find a balance between a.) number of products b.) helping find the consumer the product they’re looking for.

Jeff Sward
BrainTrust

Endless aisle is not just within one brand, but extends to everything your phone can tap into. So in the moment what the shopper needs is focus and clarity. Solve their problem, don’t further confuse them. Aisles might seem to be endless, but shopper attention span and ability to digest endless choices is not.

Dr. Stephen Needel
BrainTrust

I find that I’ll abandon an online store when I can’t find what I want easily. It’s not too much choice, it’s too little customization. Give me filters for my search and filters that make sense. A simple example – we need a new dining room chandelier and would like one in wood. Lots of sites let you filter colors, but on many there’s no filter for “wood” color.

Suresh Chaganti
BrainTrust

Endless aisles sound good in theory and are a good marketing play, but it doesn’t translate to good outcomes. Customers are overwhelmed with too much choice which leads to inaction. Retailers will have a super long tail of SKUs. There is no incentive at all for SKU rationalization. In short, no one wins.

To put it more bluntly, endless aisles are a lazy alternative to highly curated assortments which will improve the customer experience, make it operationally manageable, and lead to much better financial outcomes.

Bob Amster
BrainTrust

The biggest pain point in the endless aisle has to be that multiple retailers may be drawing from the same resources for third-party inventory and run the risk of not having the inventory on hand when an order is placed. Even this problem has a solution and that is to establish real-time on-hand inventory counts from all the third-party suppliers so the product can be taken off the “endless aisle.”

Dave Bruno
BrainTrust

“Find a need and fill it” was never meant to imply that we should find every need and fill all of them. For all but the likes of Amazon, Walmart, and Target, too much choice is, well, just too much. For most, culling assortments and differentiating by staying true to the brand promise is a much better strategy.

Xavier Lederer
BrainTrust

Although utilizing endless aisles through drop shipping sounds tempting, it leads to a number of issues around quality and availability of goods. I have worked on the drop shipping side of this business and, like in any other business, you tend to prioritize the partners that bring you more volume. During peak seasons, or when resources have to be prioritized towards a limited number of retailers, the natural tendency is to de-prioritize retailers that bring less volume – which can be retailers with endless aisles, since they tend to bring less business to their third-party drop shipping partners. One consequence is that third-party products can be out of stock when retailers most need them.

Gary Sankary
BrainTrust
The real issue at hand is how retailers attribute their items and how well their search and personalization algorithms work.The best examples of the endless aisle give customers a curated representation of items that meet the parameters of the query and have some input from the customers’ shopping patterns. As a 40-year veteran in the world of retail merchandising, I bet I’ve debated the “wide and deep” vs. “focused assortment” question more often than any other I can think of. Only the “traffic driver, incremental sales” aka “milk in the back, milk in the front” debate comes close. One of the original concepts around the extended aisle was that we could have a more focused, locally curated range of products in an assortment on the shelf, while still offering the wide range of assortment options online in a seamless shopping experience. We could be all things to all people. Where it got confusing is when we turned the towels’ assortment on our 24’ planogram into a global textile marketing place. Not a choice I want… Read more »
Brandon Rael
BrainTrust

Endless aisle capabilities are, on the surface, what companies believe consumers need; however with the paradox of choice, there are diminishing marginal returns on carrying every feasible product. For retailers outside of the “big three,” Amazon, Walmart, and Target, they do not have the digital marketplace’s advantage where they have established partnerships with third-party sellers.

Those retailers outside of the digital marketplace giants do not have the advantage of offering a vast assortment. Less-is-more assortment optimization strategies are crucial for most retailers to mitigate the inventory ownership, markdown liabilities and, most importantly, margin and EBITDA erosion.

By culling their assortments, Bed Bath & Beyond, Kohl’s, PVH Corp., Coach, and others, are reaping the benefits of having the product that will turn, drive revenues and keep consumers coming back for more.

Dave Wendland
BrainTrust

I’m personally concerned about the number of “endless aisle” retailers emerging.

The first challenge is the consistency of images/data/details representing the items — as a data provider and “normalizer” our team at HRG has certainly seen its share of good, bad, and very ugly.

The second obstacle is retail brand experience. All of the sudden the retailer has hitched its wagon to a third-party seller who may or may not represent the quality, care, and culture that the retailer has worked hard to achieve.

Finally, in a sea of sameness with overwhelming choice, differentiation becomes an issue. Sure, every retailer would like to be the one-stop shop. The reality, however, is that it is nearly impossible to be all things to all people.

I suggest retailers stick to their knitting and ensure all aspects are marvelous.

Adrian Weidmann
BrainTrust

The concept of “endless aisle” is a way for retailers to convince themselves and their customers that they can leverage their distribution relationships and be a “one-stop shop” for their shoppers. Just because you give your shopper access to a kiosk doesn’t mean anything. A better strategy is a focused merchandising and brand strategy along with intelligent customer service.

Cynthia Holcomb
BrainTrust
Still today, retailers, tech folk and brands still fail to recognize individual choices are largely determined by expectations of how the different product options will make us feel. This is a fact of choice science. Yet, in my years of developing tech designed to identify individual human sensory-preferences, crickets on behalf of retailers and tech. 20 years into online shopping personalization tech fails to recognize individual human sensory-preferences. If retailers did recognize individual human sensory-preference preferences, they would have long ago sought out a tech to solve for this fact. An effective shopping technology does not require an individual person to shop an endless database of product choices. An effective shopping technology sensory profiles each of the millions of individual product SKUs in a retailer’s product offerings waiting to be matched to the sensory-preferences of an individual shopper. It is very simple. How we select what we buy is based on our own individual, unique human sensory-preferences. Our choices are largely subconscious and driven by our emotions. An emotional match with a product drives a… Read more »
Ananda Chakravarty
BrainTrust

The concept of endless aisle is as complex as the retailer decides to make it. They own the medium, especially when in the store. There are also ways to push lower priority items to the back burner. As with search engines, customers are typically focused on searching the first page, maybe the second, regardless of how many thousands of skus are available for a product. Smart retailers will use smart data combined with smart physical inventory to capture the smartest (most profitable) outcomes.

Kenneth Leung
BrainTrust

Many retailers can’t “out Amazon” Amazon and don’t have the logistics and warehousing to handle the distribution side. For them, endless aisles online creates too much choice for customers and increases the backend costs.

wpDiscuz
Braintrust
"For all but the likes of Amazon, Walmart, and Target, too much choice is, well, just too much."
"Paradox of choice creates a psychological mindset that often results in not buying at all. This is the case in physical stores but also online."
"Perhaps the non “mega retailers” should focus first on an “endless backroom,” making the full extent of their natural assortment available to anyone, anywhere."

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