Why People Love Costco-Sized Portions

It's not just because they think they're getting a deal.

Larry Downing/Reuters

Circumstances dictate decision making, and choices between variety and monotony are no exception: People become more interested in trying, say, more popsicle flavors when they’re uncertain about their future, or when they’re making decisions in groups.

A study in the upcoming December issue of the Journal of Consumer Research found that there’s another factor dictating people’s adventurousness. Consumers, concluded the study's authors, seek out more variety when a store sells products individually, versus in bulk. The researchers suspect that this might play into yet another psychological edge that Costco, with its humongous bundles of single products, has over its retail competition: Shoppers' predilection for large quantities of a single product is strong enough to make them buy more than if the products were sold individually.

In one experiment, researchers gave out sodas, letting subjects choose whether they wanted Cokes or Sprites. One group chose between the two sodas once, and then, once that decision was made, was faced with the same Coke-or-Sprite choice again. Another group was only making one choice between two-soda combinations (two Cokes, two Sprites, or one of each). In both experiments, subjects ended up with two sodas.

Those who were choosing among the soda bundles preferred variety about a third of the time, while those who made two separate decisions preferred it nearly two-thirds of the time. (Similar results were observed when it came to choosing combinations of candy bars and roses.) The researchers even kept track of whether subjects already preferred Coke over Sprite (or vice versa), and found that many people were more swayed toward (or away from) variety by the choice structure than their own brand loyalties.

It’s long been believed that one reason stores like Costco are so popular is that they allow people to buy, for instance, a whole winter’s supply of canned soup at a per-unit price that’s far below that of soup at the grocery store. But the study points to another reason bundled packages sell so well. If a store sells individual cans of soup, people will be more likely to buy from a mix of brands, and will probably buy only a few cans. Instead, a store can, like Costco, sell a bunch of cans of a single brand together. In this setup, shoppers' preference for a large, unvaried bundle is, according to this study, strong enough to convince them to buy more cans than they would have if those same cans were sold individually.

In other words, people might be more comfortable with buying a forkliftful of paper towels simply because they aren’t purchasing it one roll at a time, and they're more likely to be okay purchasing a quantity they otherwise would've rated too big.

This study’s finding is also applicable to online retail, in which consumers can effectively “bundle” a product simply by typing in the quantity they desire. Bundled purchases, according to the author’s predictions, should be more common online than in physical stores, though this prediction hasn't been tested.