Choice editing versus informed consumer choice

Energy labellingOne thing we take for granted is that when we buy a TV set, it is safe. When we get it home we take it from the packaging and plug it in. If there is a blue flash, a loud bang and you are thrown backwards to the other side of the room you would quite fairly blame the brand and the retailer. You would take back your defunct purchase and so starts that gut-sickening chain of events that retailers and brands fear.  A few hours later the QA department and buyer would be locked into a tense meeting, products would be taken off sale, maybe even recalled. Trading standards would be informed, the press might get involved and gulp – who tells the CEO?  The consumer doesn’t ask for product safety, it is just part of the package. The rewards for doing safety well are slim but the punishments for getting it wrong are damaging and long term. No retailer would be stupid enough to compromise product safety. If a safe version is 25% more expensive – so be it.

For years it has been the consumer that business and policy makers have expected to take the lead. It must be they who climb out of the trenches and enter Nomansland first. To help them came eco-labels and green products which was flawed thinking. The same theory about the expectation of safe TV sets is emerging for sustainability.

Only a small percentage of customers were ever going to be inspired to buy green products. There are too many complex issues, too many products and customers are too busy and pre-occupied to separate the best from not-so-good products. This dilemma was discussed in the paper “I will if you will” published by the Sustainable Development Commission. The buying decisions should not be made by consumers but by retailers. In other words, if a product has avoidable environmental or ethical issues, it should not be offered to consumers in the first place. The choice should be edited out and so the phrase, “choice editing” was born.

Not only was choice editing theoretically right, it was happening with real products. Research by think tanks I chaired published evidence that “choice editing” was the main driver of change towards most greener products in ranges from washing machines, paint and cars. We ran our own focus groups and it was clear that people’s expectation was that ungreen choices should be edited from the choices they are offered. Customers do not want unsafe TVs on sale.

This thinking was converted to policy. Inspired by the success of the energy label on white goods (it was the buying choices of the major electrical retailers that removed inefficient appliances from retail ranges), ACCPE (the Government’s Advisory Committee on Consumer Products and the Environment) recommended the same type of label for cars and houses. In the UK both recommendations have been rolled out. At face value the car label is helping customers make informed choices and the banding of car road tax and company car tax with the same bands creates other incentives. It is form of choice editing when the tax bill for cars is lower for the As and Bs than the tax bill for F and G rated cars.

Lorry delivering FSC timber productsChoice editing is maintream. In 2010 Nestle announced that all Kit Kats sold in the UK would be FairTrade – this followed an announcement by Cadbury that Dairy Milk products would also be FairTrade. When B&Q launched its timber targets in 1993 it was always the company’s intention that its entire offer would be FSC certified and customers would not have to choose. This model works. How many parents would have not have bought their child the latest Harry Potter book because it was not FSC’d? However, they did not have to worry because every book was FSC certified.

Choice editing was at first treated by many in the business world with scepticism, some saw it as denying choice or “eco-fascism”.  They were wrong because not only did they miss the point that it was what consumers wanted, it also missed the point that good commerce thrives on limiting choice. Business succeeds not only by finding the most desirable choices but also by avoiding the cost and distraction of offering choices that consumers do not want or need.

Boxes of cherries and bananas in a supermarketLet’s take the apple as an example.  There are 7,500 varieties. No retailer can offer that many. Name any retailer who offers more than 20 which is just 0.25% of the total. The best retailers are those who find the criteria to edit out 99.75% of the range but give customers the impression they are enjoying a wide choice. The rule of thumb is simple; every range should have a good, better and best offer based on price and quality. Any more is duplication and any less will feel incomplete. Of course that often means more than three in each offer – life is not that simple – but it is rarely less.

So if retailers choice edit, then it makes sense that environmental and social criteria should be applied to edit out the wrong choice. Some companies and groups still hang on to the naive ambition of the informed consumer. The UK’s Carbon Trust recently launched a carbon label that informs customers of a product’s embedded carbon footprint. It is a good example of the wrong approach – customers are not going to choose between apples and pears on carbon footprints alone. Other brands have seen this. Whilst Tesco has embraced carbon labelling, most other retailers have rejected it. Time will tell who is right, but it will be brave man who gambles too much on informed consumer choice.