The Personalization Paradox: Why More Choice Doesn’t Equal More Demand

From leather goods dyed to your exact shade of ‘happy’ to jackets lined with the prints that speak to your essence, personalization and customization promise just that: to elevate products to fulfil a person’s exact wants and needs.

 In principle, the concept is almost impossible to get wrong once scalable production is in place. A recent study by Deloitte shows that 41% of consumers are interested in personalized apparel, and 19% have purchased a customized item of clothing in the past. As the millennial-centric need for expressing authenticity and individuality through style and self-image swells, we would expect this curiosity to rise.

 Even beyond the relatively narrow realm of the self, the market for personalized and customized products is evident. Brands are running on an accelerating hamster-wheel driven by rising expectations for more “newness” more often. While traditionally fashion houses would reveal two central collections a year (Fall/Winter and Spring/Summer), the fashion calendar is now riddled with countless pre-collections, resorts, cruises and now the elusive ‘drops’. There is a mounting mismatch between demand and supply which, from both a practical and an ethical standpoint, personalization and customization are poised to tackle.

 There is, however, an undeniable gulf between theory and practice that cannot be ignored. For years, reports have been declaring personalization and customization as the defining trend of our times. Last year’s Business of Fashion & McKinsey report on the State of Fashion predicted personalization to emerge as “the number one trend in 2018”. Similarly, a 2017 report by Euromonitor positioned personalization as an “antidote to the homogeny of fast-fashion”. Yet even today in 2019, for the most part, the market has not evolved much further than monogramming services.

Many would argue that the deficiency lies on the supply-side of the equation, and they wouldn’t be far wrong. Mass-personalization and made-to-order at scale is a monolithic challenge that many have yet to crack. However, there is a much more complex issue at play on the demand-side. Even though the appeal for personalized and customized products is there, customers have not acted upon this interest in the way we would expect; and as a result, brands have not seen the expected return on investment from their initiatives.

 So why are customers not taking up this opportunity to personalize and customize their purchases? The answer can be explained through three core concepts in the growing field of Behavioural Economics.

1.  Choice Overload

 Today, the clothing industry is worth $1.3 trillion, and has almost doubled production in the last 15 years, according to a report by the Ellen MacArthur Foundation. This has led to an incredibly saturated market, where the ‘Zara-model’ of delivering new products to store twice a week is seen as the Holy Grail.

 Although more choice keeps a brand fresh and encourages repeat visits, for customers it might be just too much of a good thing. Choice overload or ‘overchoice’ is the phenomenon that too many options may actually produce the opposite result than what we would expect: consumers choosing to exercise these additional possibilities less. In Barry Schwartz’ ‘The Paradox of Choice’ he summarises “Learning to choose is hard; learning to choose well is harder; and learning to choose well in a world of unlimited possibilities is harder still, perhaps too hard.” 

 2.  Status-Quo Bias

So what happens when consumers are presented with too many choices? In short, they avoid them. As psychological studies show, when an individual suffers from decision fatigue, choice deferral will be employed. In practice, the effort of choosing your embroidery on your handbag on top of your color selection, or applying a unique lining on your sneakers on top of choosing a design, might outweigh the benefit of it all.

As we know, not making a choice is still a choice in itself. Cue the status quo – for all the will in the world, being different is hard, and most consumers will default to the norm. Despite the endless supply of alternatives to the mainstream, trends still exist in fashion today, and this is largely due to the way our brains are wired: to take shortcuts when decision-making is overwhelming or time-consuming.

 3. Regret Aversion

Truth be told, we have made large strides in the last decade. The almost unlimited access to influencers and the democratization of content has taught us to navigate and filter through never-ending social media feeds. Consumers have become empowered, and the fashion industry as a whole more inclusive.

 Nevertheless, we are still feeling the hangover of the days when trends were determined by an elite set of individuals, who elected what was ‘in’ from behind their glossy front covers. Amongst a dizzying volume of voices today it is almost impossible to tell what’s cool, and most consumers still crave the assurance that they are making a good style decision.

Regret aversion is the very real fear that humans experience when considering whether their choice will have been the right one in the future. This rings true for fashion more than almost any other industry, especially as today’s ‘conscious consumers’ seek to avoid the use of single-wear clothing. “Will this color palette be cool this summer?” or “will I still like this item in a year’s time?” are considerations that might cross our minds when making a purchase.

No matter how you cut it, the optionality of personalizing or customizing a product extends the already impossible array of choice out there to almost infinity. And while the allure for it is there, the style maturity and confidence of most consumers will take some time to build and adjust to the realm of unlimited possibilities.

As we transition to a new age of dialogue between customers and brands, the path must be carefully curated to enable confident and informed decisions by both parties. Brands might employ ‘nudges’ to encourage a customer to make a particular choice. For example, it might advertise that adding the red print is a great choice for extraverts or individuals with an olive skin complexion. Nudges such as these can enable customers to feel a sense of empowerment in having made a choice themselves, whilst giving them added assurance that it is a good one for their particular needs.

The overall task? Construct the choice architecture in a way that acknowledges the biases of the human mind. Ultimately, customers don’t want more – they want things to better satisfy their needs. 

Kiara Alves Walters is a strategy specialist in luxury fashion, with a background in economics and management consulting. She currently works in the Strategy & Innovation team at Farfetch. The views expressed in this piece are those of the author and do not necessarily reflect the views of Farfetch.

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