Case Study: Costco

I went to Costco today, thinking about another lesson from The Paradox of Choice : Why More Is Less. In the book, Barry Schwartz talks about a study called "When Choice is Demotivating", which sets up an experiment with a line of exotic high-quality jams. In one condition of the experiment, there were 6 varieties available for tasting, in the other condition all 24 varieties were available. The table with 24 varieties attracted more people than the 6 variety table, but on average, the number of jams that people tasted was about the same. However, the interesting result is this: 30 percent of the people who tasted at the 6-variety table bought a jar of jam, while only 3 percent of those who tasted at the 24 variety table bought a jar of jam. The researchers speculate that having more options may discourage consumers because it forces the amount of effort needed in making a decision. So the consumers decide not to decide and end up not buying the product.
Costco is a very interesting store -- they have a very limited item selection, often only stocking only a few brands of a given type of product, and everything only comes in one size (the exception being clothing, which I won't get into here). By going into Costco, a lot of the choice process is taken away from the customer. Rather than comparing brands, sizes, varieties and cost, the consumer's decision-making process in Costco becomes whether or not they wish to buy the product. The sample tables at Costco are designed to introduce customers to new products which Costco only stocks one brand of. For instance, today at Costco, I noticed them pushing Progresso Soup in the Clam Chowder variety -- They have other varieties of soups (Campbell's Chunky Chicken Noodle and Campbell's Cream of Mushroom), but no other brand of Clam Chowder. This makes it very simple for the customer who is looking to buy Clam Chowder to make a decision. They don't have to choose a size, nor do they have to choose a brand. They merely need to decide whether or not they liked the sample they tried enough to purchase a 12 can package of Progresso Clam Chowder.
Compare this to the experience of shopping at a supermarket. You walk into the canned soup aisle and you are bombarded with a plethora of choices - a dozen or so brands, each with a dozen different varieties and at least two sizes of cans, with 3 varieties of packaging -- pull-tab, can opener, and microwave-safe. Costco makes the decision-making process easy by removing choices.
One of the items that Costco has more than one variety of (but is still selection limited) are Plasma TVs. Whereas stores like Best Buy and Circuit City stock over 50 varieties of Plasma TVs, Costco has 6. I'd guess that Costco sells just as many Plasma TVs at the Electronics stores do, perhaps even more because people feel they have a more limited selection to choose from. You can see all 6 Plasmas at the same time and decide which has the size you want, and which has the best color. Go to an electronics store and try that, and I'll find you in a couple of days still trying to figure out whether Set #23, the 3rd TV in the 3rd row or Set #76 (the 6th TV in the 8th row) has better color.
Long story short, the more choices we have, the more effort it takes to make a decision, and less likely we are to purchase the product. If we give people less choices, they are more likely to buy.