Photograph by Ramin Talaie — Bloomberg/Getty Images

The world's largest maker of household products is finding that a leaner assortment is better for business, according to its CEO.

By Phil Wahba
June 25, 2015
June 25, 2015

Sometime less is more when it comes to consumer choice.

While consumer and packaged goods makers try to offer shoppers as much variety as possible to win their business and outdo the competition with a steady stream of ‘new and improved’ products, at some point too big an assortment overwhelms customers and defeats the purpose, according to the chief executive of the world’s biggest maker of household products, Procter & Gamble. PG

“I don’t think the shopper or consumer sees it as innovative– the innovation that matters is the innovation she buys,” P&G CEO A.G. Lafley said on Wednesday at the Consumer Goods Forum global summit in New York.

Lafley, who is overseeing a massive streamlining of P&G’s portfolio by shedding about 100 brands to focus on the top 80 to 90, like Pampers diapers and Tide detergent, that generate 90% of its $83 billion in 2014 sales, wondered whether CPG companies introduced too many new products, pointing out the fact that the vast majority of launches add very little to sales, if any. P&G is currently selling off several top beauty brands.

Indeed, some 20% of the consumer and packaged goods industry’s assortment generates 80% of sales. Besides, he noted, adding 20% to 30% to the assortment might only lift sales 1%, a poor return.

And too much selection can impede sales: an overwhelmed customer will just give up, costing the company and retailers business.

“It’s too confusing,” said Lafley, P&G CEO from 2000 to 2009, and again since 2013 after his handpicked successor, Robert McDonald, didn’t live up to the job. “You’re wasting their time.”

As for the pace of innovation and changes in packaging, that is often more a reflection of executives’ desires than those of customers.

“In general, we can get tired of our brand, what it stands for, our product, our package, long before our consumer does,” Lafley said. “New isn’t the best product in the store, the best product in the store is the one she or he wants, purchase more often, uses more often and comes back to.”

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