The illusion of choice

A comment on my Walmart post below reminded me of a grouse I’ve been nursing for some time. One thing about big stores is that they could offer a really wide variety of merchandise, and having failed to find somewhat specialized photographic items in the small neighborhood camera stores that used to be the only way this equipment was sold in France, I am a great admirer of places like B&H Photo. B&H, I should mention, is not just a web address with a warehouse you can’t actually go in to; they have a real store with everything out to pick up and mess with. Of course this store is in New York, not where you probably are, but places like it are one reason cities like New York are good places to live. The Bay Area has four serious photography retailers that I know of, and one is even in Berkeley.

However, the potential variety of inventory in most big stores is an illusion, and the less specialized they are the more this is true. Take CompUSA, which does have a presence near you, and many thousand square feet of it. CompUSA has a computer that watches sales like a hawk, and ruthlessly prunes slow-moving items, so the large rack of cables actually has no specialized or rare ones, but twenty hooks with the same five fast movers, the cables you already have two or three of . If you want something the least bit arcane, you are out of luck, because the maximum straight-face selling price of a special item does not capture its real value to the customer. I believe CompUSA no longer stocks any SCSI cables in its stores at all, though it has every known brand of blank CD in five different package sizes each.

The other day, I was in OSH, a local chain of really big hardware stores recently bought by Sears, which brought its wonderful inventory-optimizing computer. What I wanted was a 6×1 x 6mm socket head metric set screw, not really such a specialized item given how much equipment is metric. It’s not a fine-thread-series set screw, and not extra-teeny for inside a camera nor really enormous for your pet bulldozer.

OSH no longer has any metric set screws, though it did three years ago. It has a zillion light bulbs, including many compact fluorescents that differ only in brand and details of shape, but (for another example) no dimmable fluorescents. Dimmable is a meaningful and useful feature for this item; slightly-more-curled-up tube is not.

So I went to my downtown Ace Hardware store, which is incidentally two blocks from a rapid transit station. Ace has seriously damaged the independent hardware stores that have joined their system, but they haven’t completely ruined them. This store is a tenth the size of OSH and doesn’t sell any lawn furniture at all, but they had a couple of drawers of metric set screws in many sizes including the one I needed. Hardware stores are among my personal holy places from early years, so I’m especially aware of this problem and have watched it over the years. MBAs in suits who think a torque wrench is for loosening torques have taken over, with no understanding that the large inventory of things you only need once in a long while is what brings you in to buy a bunch of other standard stuff: I went out of Ace with my 39c set screw – and a small bag with glue, light bulbs, and a garden hose nozzle.

It’s also worth noting that a lot of the variety big stores offer is spurious, items that differ only in superficial and trivial aspects (unlike the difference between a 6mm and a 10-32 set screw, which is critical even though they look pretty much alike to the kid in the suit from corporate). There’s also good evidence that we think we value choice and options a lot more than we really do, an issue explored by Barry Schwartz in his wonderful book, The Paradox of Choice.

I should also note, on the dehumanizing theme of my earlier post, that a consequence of the relentless drive for low money prices of big stores has been the scarcity, stupefaction, ignorance, and demotivation of the help. I’ve known more about most hardware items than the clerks for decades, and I don’t mind that, but now I have to deal with people in Home Depot who cannot direct me anywhere because they don’t even know the names of things, never mind what they are good for, and Home Depot is actually better on this score than most. Actually, I think the change from counter-only retail (what you still find at a plumbing supply store or W.W. Grainger) to self-service with everything out to look at is progress in home and hardware stores, because there’s always cool new stuff available that you wouldn’t know to ask for if it weren’t displayed next to the standard model. But I don’t think it’s improved my life that I usually go to Home Depot and and don’t exchange a single word with a human being (except, sometimes, the clerk who kicks the automatic self-checkout machine with the idiot recorded smiley voice, when it can’t read a code or is paralyzed by an “unexpected item in bagging area”).

The value of the ample choice big stores supposedly provide is also undercut by an infuriating trend to boutiquizing, especially in clothing stores. I went to Macy’s with my daughter looking for shoes recently, and she had a fairly good idea of the style and color she wanted. One would expect the various makers’ versions of a black closed-toe flat with to be arranged for easy comparison, but one would be wrong, even though that is precisely the value a retailer adds to wholesale merchandise. Instead, the shoes were arranged by brand, so we had to go to a dozen different tables to make the obvious comparison, never quite sure if we had seen them all. I asked her about this, and she said she never went looking for “La Donnaccia shoes in whatever style”. French bookstores used to shelve their books by publisher, an infurating practice that maximizes staff and wholesaler convenience at the expense of the customer (does anyone go to the store to find “something from Gallimard”?), and I thought it was one of those quaint dumb things foreigners did out of mindless habit, but apparently it’s catching.

I never met a payroll and I’ve never run a business. I know the inexorable incentives of the market drive competing merchants to sell us an optimal package of goods and services, and I’m not any kind of communist; I really like markets. But I’m not so sure retailers really know what they’re doing, and I also believe that externalities and non-market values exist, and that we should be a lot more creative and responsible as a society in attending to them.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

20 thoughts on “The illusion of choice”

  1. I concur with your grouse. I would like to add to your grouse concerning variety and choice a grouse also expressed in an earlier Mark post.
    The argument that big box retailers, particularly Wal*Mart, put quality goods in the hands of those who wouldn't otherwise be able to afford them is not only somewhat counterintuitive but also counter to my own experiences, particularly w/r/t clothing and housewares.
    I've worked at a large retailer, although not in a customer service capacity. What I can tell you from my experience is that the pay was terrible, management was less than competent, most workers spent most of their working time in a bored stupor, and turnover was high.
    I don't much like shopping at stores like this. In particular, I have trouble shopping at Wal*Mart. Part of it is aesthetic: with its crowded interiors, harsh lighting, and spatial chaos, Wal*Mart feels like a horrific, branded, panoptic flea market. I also see numb misery in the faces of employees there.

  2. I patronize independent hardware stores, pharmacies, tackle shops and bakeries (especially bakeries!) whenever possible.
    Regarding "boutiquization": faced with the challenge of quickly obtaining a pair of swim-goggles for my daughter a in an unfamiliar suburb, I bit the bullet and headed for the local mall. Mistake.
    I'm sure I was correct in assuming that swim goggles were available at an undisclosed location somewhere in that mall but the place was designed to put as many obstales–presumably intended to encourage impulse purchases–as possible between me and those goggles.
    Result: failure. Lesson: don't go to an unfamiliar mall to buy a specific item. Malls are designed for recreational shopping–a sport in which I don't indulge.

  3. My late father, a Harvard professor, used to say that his first choice after an academic career would have been to work in a hardware store. I can't imagine him saying that these days.
    Thank God for the Web, though. If I need the equivalent of a metric set screw that I'm not going to find in a big-box store, I can almost always find it somewhere online at an e-tailer that can stock even the most specialized items because it doesn't have the overhead of a brick-and-mortar store.

  4. In Newton, MA, is the semi-legendary New England Mobile Book Fair, which is neither mobile nor a "book fair"; it's a big store in which most of the paperbacks are arranged by publisher. This turns out to be pretty interesting, as you can get Amazon-recommendation-like effects by seeing what else a given house has put out, once you find that they have something you like. (There are various copies of Books in Print, both paper and electronic, around so you can find something in particular.)
    But I wouldn't want all the bookstores to go to that system, by any means.

  5. A very successful Canadian retailer named Leonard Lee agrees with you– that's how Lee Valley Tools operates, and I have somewhere a copy of an interview in which he talks about just this issue.
    At the heart of what you're talking about is a disconnect between the customer's point of view and the retailer's. You want variety, and even more, you want what you need when you need it. That means you want a retailer who can stock a whole bunch of stuff that doesn't move much.
    From the retail chains' point of view, the fundamental point is that they're not in the business of providing what it is you're willing to pay for, nor of stocking what you'll need at some point but not now; they're in the business of maximizing turnover or cash flow. Computers give them the ability to track cash flow at every shelf location at all times, as supermarkets do. (Variety is shrinking at supermarkets too.)
    These stores are also in the business of standardizing methods to maximize throughput at the least cost. That means reducing the number of inventory items, as well as using 39-hour-a-week employees who don't know anything about the actual products. The reduced inventory works for them; the manager is supposed to be the one who knows things. Everybody else is there to flog the specials, steer customers to the general area, make sure customers don't steal, and just generally look like the store has personnel.
    This operation is a lot like what Eric Schlosser describes in Fast Food Nation; throughput is God when you have capital invested.
    The bigger issue of variety as against what moves is very much like the problem libraries have. Do they just shelve what people take out and then "de-accession" things when they stop circulating, or do they buy up stuff as it comes out and keep it forever? About 20 years ago there was a move even in research libraries to shrink collections to what moved. I think it was beaten back at most places.
    But the basic dynamic is the same: they're balancing the costs of stocking a range of parts/books, which will draw people in at some undeterminable point when they'll buy a lot more or use the materials to produce new works, against moving as much as they can now but not knowing whether the customer will ever come back or not having the material your researchers need in the future.
    Fundamentally I think the current retail model, which you describe, is based on over-emphasizing the financial nature of the business, and also on the idea that each transaction stands alone. It isn't intended to develop loyalty and repeat business, despite all the hoopla we often see about "building relationships."
    As a general rule, whenever companies– especially retailers– stress something, you can bet that they've done the opposite. Woolrich, which is near me, rolled out a big new theme about how they've always been locally based and a part of the community and an American tradition, etc. When you look at the labels, though, it's all made in China. They used to make a lot domestically but they've shifted to China in the past two or three years.
    My attitude when I see that is, as long as it's all Chinese schlock anyway, I might as well just go to Value City and get it cheap. No need to pay Woolrich prices for the same shit I'm seeing everywhere. The connection they're advertising is just schtick.
    Pressures in retail are immense, and I think the web is the only way we'll be able to get those specialty items outside the biggest of the big cities pretty soon. Thing is, it's ramifying all the way down into manufacturing too. If I were looking for a really long-term speculation, it'd be stocks of odd parts that used to be made in the US, or even the machinery that was used to make them.

  6. The grouse I would add is the new assistant manager who has
    been in the store one or two days. He (usually) is so certain he
    knows more about the store than the customer who has been
    buying from the store for ten or fifteen years.

  7. I'm glad to see someone beginning to address this. I have been frustrated for years with stocking problems in all kinds of stores and with the total lack of responsibility the stores take for their lack of variety.
    My biggest beef has been at the grocery store. I shop at Cub. It's a big store, owned by a big distributor, yet they carry exactly ONE dye-free, fragrance-free liquid fabric softener (as you can imagine, however, they have eight fragrances of each brand taking up wads of space — none of which I can use). Guess how often I go there with that on my list and they don't have it? As soon as I get to liking a product, it's gone. They can't keep fresh milk in stock (the kind that I buy).
    It's like shopping has become majority rule and screw everybody else. I can understand that stores can't afford to stock a lot of stuff that doesn't sell, but they can't sell stuff they don't stock either.
    I am grateful for places like B&H. I buy ALL my professional equipment from them (except lamps — I can get them at a lighting store in St. Paul). The consequences of this is that I have spent tens of thousands of dollars buying from a company in NYC rather than a local store in Minneapolis. I would rather buy locally, sure, but the time involved, the lack of expertise on the part of the sales staff and the lack of selection completely stymies any effort to do so (and I shop at what used to be "pro" outlets such as West Photo and National Camera).
    I would love to see a lot more attention and pressure put on retailers to get their act together.

  8. To illustrate how the variety of inventory has declined, when you come into possession of something old these days, you have two choices- chuck it, or condemn yourself to a lifetime search for "obsolete" parts.
    Most stores today aggressively assert this "like it or lump it" situation to save themselves the time and trouble of dealing with picky customers. The "help" on the floor is really there to prevent shoplifting, and can be trusted not to have the foggiest notion of what you're talking about if you ask a question.
    The good news would be that shopping on the web is more than competitive with driving to a big box retailer. My local merchants get my dollar for what they do best, and the web gets the rest. Anything I can only find at Walmart is just something I don't need.

  9. Let's see if I've understood your point: today's big stores don't offer as much choice as small stores used to–take hardware, for instance, where Home Depot has everything you could possibly want, but the staff is ignorant and unhelpful. Is that what you're trying to say?
    There are certainly things to complain about in modern America, but a poverty of appealing retail options really can't be said to be high on the list.

  10. Another Wal-Mart gripe, and not just Wal-Mart: the quest by producers to crowd other brands off the shelf with their variants on their flagship product.
    For ex, Orville Redenbacher popcorn has about 6 or 8 varieties now, each of which is bumping some unknown competing product off the shelf.
    The special Wal-Mart coup de grace is that, on several trips now, my store has carried all of Orville's popcorn except just plain "Butter" flavor (i.e., the one that 90% of shoppers want). So I buy the cheap Act II stuff instead, exactly contrary to the machinations of the Redenbacher VP in charge of that scheme … because it's at least available in the commonly desired flavor I need.

  11. Dan: No. Home Depot doesn't begin to have everything I want. Their hardware (nuts, bolts, screws and like that) assortment is weak, their lumber is terrible…flatsawed, boxed heart etc, and their electrical and plumbing is so so at best. They will not stock southern yellow pine treated lumber out here, only hard-to-treat western species which are never fully penetrated and much less strong to boot. Generally their wood products are inferior quality at low prices, for people who know little about wood.
    I do appreciate their hours, as professional outlets aren't open weekends and certainly not Sunday. But it is not an appealing retail option even if one thinks that shopping is only about the stuff you buy and what you pay for it.

  12. Yes, it is sad about OSH. Shopped there since 1958 when it was a real Orchard Supply Hardware Store. The local orcharists started it back in the day. They eventually could not compete with the big box places so had to look to Sears. Sears used to be like OSH but the bean counters took them over too. I remember the old Sears catalogs that had everything in them, maybe even metric set screws.

  13. Let's not overstate the undisputed wonderfulness of internet retail: I can get a lot of stuff there, but not everything I want. Not a mangosteen, not a nice brisket for pot roast, not alterations on my clothing, and not things that can't be adequately portrayed in a photo plus words, or that I don't know how to ask for but would recognize if I came upon one.
    And I can't get anything as a personal interaction experience; EBay feedback is a lame and crippled form of intercourse. Anyway, my point was the lack of real or useful variety in physical stores that could provide it and don't.

  14. Am I the only one here who lived in rural America before Wal-Mart came to town? It was only nine months out of the year as a college student, but finding almost anything was still teh suck. Wal-Mart's arrival in Franklin County Tennessee was a big improvement. I'm sure things have changed and bringing in Mr Sam's store brought its own problems, but let's not forget what things were like for significant swathes of the country before.
    And in the mid-90s I lived in downtown DC, where shopping was every bit as bad as it was in late-80s rural America. You couldn't find half the stuff you needed (let alone wanted), getting it from there (store) to here (home) was a complete pain in the ass, and little stuff like good quality fresh vegetables was the subject of avidly traded tales of where to find them. The problems of big-box retail were problems we would have liked to have.

  15. I've often wondered why more retail doesn't work on the furniture model: a wide variety of stuff on display, but nothing in stock. It all has to be shipped to you. I think this would work especially well for shoes.

  16. "
    Let's not overstate the undisputed wonderfulness of internet retail: I can get a lot of stuff there, but not everything I want.
    "
    I sympathize, Michael, but honesty, jesus christ!
    You start off being upset that you can't find hardware items, which you could perfectly adequately find on the internet and could perfectly adequately wait for, in a bricks and mortars store.
    When that is pointed out, you switch to complaining that you can't find certain food items on the internet — though you could undoubtedly find them if you bothered to look at the appropriate stores in the Bay Area, starting with Dreygers and ascending in price.
    At some point, I hate to be mean, but this comes across as just whining. It's not enough to have more items available for purchase, and mostly at cheaper prices, than ever before in human history, but they all have to be available at the same, personalized store five minutes walk from where you live.
    Look, if you want to discuss a real problem, let's discuss the fact that I, here in Los Angeles, am unable to buy, for love or money, via specialty store or internet, Caramelk chocolate bars, (the ones made in South Africa that consist of caramelized white chocolate, not the crap called Caramelk that's sold in Canada and the UK that consists of milk chocolate filled with gooey caramel). THAT is a serious problem deserving of a blog post and more!

  17. > I've often wondered why more retail
    > doesn't work on the furniture model:
    > a wide variety of stuff on display,
    > but nothing in stock. It all has to
    > be shipped to you. I think this would
    > work especially well for shoes.
    Shipping costs. Working in the business-to-wholesale world and now beset with demands for direct-to-consumer sales, I can safely report that the shipping costs of this model are unbelievably high. Customer will not accept invoices that show the true shipping cost, so it has to be hidden somewhere else with all the associated problems that brings.
    Even in the business-to-wholesale world the increase in shipping costs over the last 5 years has come close to crippling us and many of our competitors. When I see the prices people pay for shipping on Internet purchases I am staggered.
    Cranky

  18. Skip, you have no idea how assinine you sound. "I can't even bother to google for my facts" because, counter-intuitive as it sounds, there is an illusion of choice, and Michael hits it right on: you have 53 ways to buy the same 10 things. Go get some facts, then come play.
    Maynard, 2 points: 1) a 39-cent screw plus 10.95 shipping and handling is not a bargain, and may not actually represent a true choice. Certainly Michael's argument that hardware stores offer less than they used to, and that this MIGHT be caused by business practice, rather than pure customer demand, is unassailable. 2) The argument that you PROBABLY COULD find the object at another store doesn't bear on the central theme of Michael's post: that Big Box stores, whatever else you think of them, do a poor job of representing a the choices that they could. And, that the stores they replaced, DID. 5 minutes from home. Now, we get to drive 1/2 way across the bay to not find what we want.
    I have both met payroll and run a business: still do, in fact, just the sort of Mom and Pop business that hardware stores used to be (A yarn shop.)It is brutal to satisfy customers. I don't do it by hiring robots, nor by selling 25 of the same thing exclusively. but I do have to limit choices, much to my customers' dismay.

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