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OM in the News: Why the Consumer Has Fewer Choices–Maybe for Good

June 29, 2020

Consumer-oriented companies spent the past decades trying to please just about everyone, as we discuss in Chapter 7’s treatment of mass customization. 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, writes The Wall Street Journal (June 27-28, 2020).

Some IGA grocery stores now offer only 4 choices of toilet paper. “We may not need 40 different choices of toilet paper.” says IGA’s CEO. Georgia-Pacific switched all production of its Quilted Northern toilet paper to 328-sheet rolls; it had been also producing the brand in 164-sheet rolls. It plans to stick with the bigger rolls even after the pandemic, which let it speed production and make distribution more efficient. Retailers also had an easier time keeping Northern toilet paper in stock by having fewer varieties on shelves.

In grocery stores, the average number of SKUs was down 7% over the past month, with some categories, such as baby care, bakery and meat, down 30%. Frito-Lay, featured in Chapter 13’s Global Company Profile, stopped producing 1/5 of its products. Over the past 45 years, Lay’s has gone to 60 varieties of chips from 4. Since 1984, Campbell Soup has quadrupled the types of soup it sells to about 400.

Those efforts helped consumer-goods makers claim more shelf space as supermarkets expanded into big-box stores. In 2018, the average U.S. food retailer stocked 33,000 different items, compared with 9,000 SKUs in 1975, But now food makers have cut back on options, streamlined supply chains and concentrated production on the most-demanded goods.

Darden Restaurants said it was going to largely keep slimmed-down menus it started during the pandemic, which have helped reduce prep work and costs. And while last year, auto makers offered more than 605,000 vehicle configurations (even before taking different colors into account), showrooms today offer choices more limited because of supply-chain bottlenecks and lower volumes.

Classroom discussion questions:
1. What are the advantages of stocking fewer SKUs?

2. Why is this a supply chain issue (see Ch. 11)?

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