Although the effects of COVID-19 have been diverse and varied, a consistent implication is appearing among companies’ product line decisions. Across a vast range of industries, markets, and contexts, product lines are narrower, shallower, and smaller. Consider some key and diverse examples in multiple industries:
- Restaurants. Outback Steakhouses have removed about 40 percent of the items that were on its menus before the pandemic. Olive Garden’s menus are substantially diminished. McDonald’s has pulled back on its menu expansions, telling franchisees that novel options like bagels and new salads are on hold for now.
- Fast moving consumer goods. In response to the well-known toilet paper supply crises, Georgia-Pacific has focused virtually all its production on one type of Quilted Northern, produced in larger rolls. Other versions, styles, and sizes simply will not be produced, at least for the foreseeable future.
- Food manufacturers. PepsiCo. halted production of an estimated 20 percent of its various products. Nestle removed various Lean Cuisine recipes from freezers and plans to maintain its reduced product line going forward. Various meat producers, including Tyson Foods and Cargill, had to shut down plants temporarily in response to coronavirus spreading events, and as they gear back up, those plants are focusing on only the most in-demand products.
- Grocery stores. Across categories and chains, product variety has decreased by around one-third—slightly more in some categories, slightly less in others. At IGA, consumers now find 4 toilet paper stockkeeping units, whereas prior to the pandemic, they encountered about 40.
- Vehicles. Harley-Davidson has cautioned its dealerships that approximately 70 percent of them will not receive any further shipments in 2020. Automobile dealerships also are noting the limits on options available, especially as the effects of earlier disruptions in manufacturing supply chains become evident. For example, fewer all-wheel drive vehicles are being produced, because the original equipment required for that option has not been accessible in automotive supply chains.
These are just a select sampling of product line rationalization efforts, but the consistent effort across these diverse actors highlights the universality of this trend. It reflects companies’ attempts to deal with the supply chain constraints imposed by the coronavirus.
But it also appears to be a response to consumer demands. Overwhelmed by the state of the world and suffering heightened stress overall, consumers generally are turning to familiar, known product options. Novelty and a glut of choices feel oppressive rather than compelling. When consumers already are burdened with decisions about whether to send their children to school or let them take virtual classes, which mask they should wear, and whether it is safe to go back to their local eatery, the last thing they want is to have to struggle with a choice among 40 different types of toilet paper.
- How is offering fewer varieties meeting new customer needs?
- Do you think that companies should stick with this model after the Pandemic? Why or why not?
Source: Annie Gasparro, Jacob Bunge, and Heather Haddon, “Why the American Consumers Has Fewer Choices—Maybe for Good,” The Wall Street Journal, June 27, 2020