GB794 Unit 2 Consumer Study Critique Example

Fewer Items, More Sales? A Unit 2 Critique of an Online Grocer's Assortment Cut

[Student Name]

Purdue University Global

GB794: Advanced Topics in Marketing

Unit 2 Consumer Study Critique

[Instructor Name]

[Date]

Thornbury Market and its nutrition-bar decision are composite and illustrative; the studies critiqued are real.

The Study Restated

Boatwright and Nunes (2001) analyzed a natural experiment at an online grocer. The grocer reduced the number of items, or stock-keeping units, in 94 percent of its categories, concentrating the cuts on low-selling items. Using household purchase records, the authors compared sales in 42 categories before and after the cuts. Sales increased by an average of 11 percent across those categories. They rose in more than two-thirds of them, and nearly half of those saw increases of 10 percent or more. Three-quarters of households increased their overall spending after the cut. The authors then examined how the type of cut mattered, classifying reductions by how they changed the attributes available in a category, such as the number of brands or sizes, and found that consumers responded differently depending on which attributes were lost.

The finding seemed to confirm earlier work. Broniarczyk et al. (1998) had shown in laboratory and store studies that shoppers' perceptions of assortment depend heavily on two cues, whether their favorite item remains and how much shelf space the category occupies. If low-preference items are cut and space is held constant, shoppers barely notice. Boatwright and Nunes appeared to show that such cuts could raise sales, not merely leave them unharmed.

What the Category-Level Comparison Varies

The study's central comparison is category sales before and after the cut. Four things besides the number of items changed at the same time or could have.

Time. The study compares months before the cut with months after it, with no control group of categories or stores that were not cut. Anything else that changed in the grocer's business over the same months, such as growth in online grocery generally or the grocer's own marketing, would appear as an effect of the cut. Online grocery was growing rapidly at the time.

Which items were cut. Cuts concentrated on low-selling items. If those items were low-selling because shoppers rarely wanted them, removing them would redirect a small number of purchases to the remaining items, and much of the remaining sales would have occurred anyway.

Search costs. On an online grocer's site, fewer items mean shorter lists to scroll. Part of any effect may reflect easier navigation of a website rather than a response to assortment as such, which would make the result less applicable to physical shelves.

Which customers stayed. Category sales are summed across the customers who continued to shop. If some customers reduced their shopping or left because their items disappeared, category sales among those who remained could rise while the store as a whole lost.

The Most Important Rival: The Store-Level View

The fourth point is not hypothetical. Borle et al. (2005) studied what appears to have been the same assortment reduction at the same online grocer, using household purchase records for every category, and modeled sales at the store level and the category level together. They found that the reduction in assortment reduced overall store sales, through lower shopping frequency and spending among households, a result that contrasted with the earlier category-level studies.

The two studies are not necessarily in conflict. A category can gain sales while the store loses them, if the cut concentrates purchases in the remaining items of that category but some households, disappointed by missing items, shop less often overall. Boatwright and Nunes measured the first; Borle and colleagues measured the second.

The same assortment cut raised sales in the categories that were cut and lowered sales in the store that cut them.

The Attribute Analysis Deserves More Weight Than the Average

The study's most useful finding for a retailer is not the 11 percent average but the analysis of how different kinds of cuts mattered. The authors reported that consumers reacted differently depending on which attributes a cut removed, such as the number of brands or sizes still on offer, so that some kinds of reduction were far safer than others. The average conceals that variation, and a merchandising team citing the average would miss the part of the study that tells it which items it can safely remove.

That point bears directly on the bar decision. Nutrition bars differ on attributes that matter a great deal to some shoppers: protein content, sugar level, allergens, dietary programs and brand. A cut that removes the third flavor of a brand that keeps two others is a different act from a cut that removes the only nut-free option.

What a Stronger Design Would Have Shown

A design that could separate the cut's effect from everything else changing at the grocer would have compared categories or customers that experienced the cut with similar ones that did not, over the same period. Randomizing which households saw the reduced assortment, which an online grocer could in principle do, would have allowed a direct comparison of total spending. Short of that, a comparison of cut categories with uncut categories over the same months would have addressed the trend problem, though not the problem of which customers stayed. Borle and colleagues' store-level model addressed the second problem by following households across all categories.

What the Evidence Supports

Taken together, the studies support a narrow claim: reducing low-selling items in a category need not reduce, and may increase, sales within that category, particularly when the cuts preserve shoppers' favorite items and the attributes they care about. They do not support the broader claim that assortment cuts raise a retailer's total sales. On the store-level evidence, a large cut across many categories can cost the retailer customers' visits and spending.

Back to the Bar Aisle

Thornbury's proposal cuts one category, nutrition bars, from 140 items to 90. The evidence suggests three questions before deciding. First, are the 50 items to be cut genuinely low-preference, and do any of them serve a small group of loyal buyers who might shop elsewhere for them, such as customers buying allergen-free bars? Second, will shelf space for the category stay the same, which Broniarczyk and colleagues found important for perceived variety? Third, can the cut be tested in some stores before it is made chain-wide, so that total store sales and basket size, not only category sales, can be compared with stores that keep the full set? A test of that kind is the subject of the Unit 3 design memo.

References

Boatwright, P., & Nunes, J. C. (2001). Reducing assortment: An attribute-based approach. Journal of Marketing, 65(3), 50-63. https://doi.org/10.1509/jmkg.65.3.50.18330

Borle, S., Boatwright, P., Kadane, J. B., Nunes, J. C., & Shmueli, G. (2005). The effect of product assortment changes on customer retention. Marketing Science, 24(4), 616-622. https://doi.org/10.1287/mksc.1050.0121

Broniarczyk, S. M., Hoyer, W. D., & McAlister, L. (1998). Consumers' perceptions of the assortment offered in a grocery category: The impact of item reduction. Journal of Marketing Research, 35(2), 166-176. https://doi.org/10.1177/002224379803500203