The Paradox of No Choice
An odd VENN diagram of tariffs and AI are narrowing our choices as customers. Will this change be permanent? What are the implications for products and retailers? (Issue #178)
Before we get to today's main topic, some miscellaneous goodies and things worth your attention…
This is creepy: The CEOs of Zoom and Klarna each used AI avatars to represent themselves during recent earnings calls. (H/T Elise Neel.)
More on South Park: In the NYT ($), James Poniewozik has a nice think piece about the new season of South Park and why it's important at this moment. (See my own piece from a few weeks back here.)
By the way, the second episode of this season of South Park was just a raunchy, hilarious, and insightful as the first.
Restoring speech to those who have lost it (NYT $): I'm not always an AI skeptic. This piece digs into new technology coming out of Stanford that uses predictive AI to translate brainwaves into speech for people who have lost the ability to speak. The clinical volunteer suffers from ALS. This was a poignant read for me because, in December of 2023, my friend Fawn Fitter legally ended her life because her ALS would have soon taken her ability to communicate. Fawn lived in San Francisco, not far from Stanford. If only this prototype had come along earlier.
On the lighter side...
Superman is still in theaters, but you can also now rent ($25) or buy ($30) it to stream at home. I loved the movie in the theaters, and I'm tempted to buy it to watch again.
The Bigfoot Vlogs on Instagram are AI-generated shorts featuring a foul-mouthed and very funny Sasquatch. I recommend starting with the one when Bigfoot has coffee for the first time.
The Roses looks great! La Profesora and I are keen to see it when it comes out later this month. Check out the trailer. I fondly remember the 1989 original, The War of the Roses, with Michael Douglas, Kathleen Turner, and Danny DeVito.
The Reese's/Oreo collab looks interesting and yummy. WSJ ($) has a nice piece on how the Hershey and Mondelez partnership came to happen. The new treats hit stores in September.
Practical Matters:
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On to our top story, which takes its title from Barry Schwartz's famous and terrific book, The Paradox of Choice: Why More is Less.
The Paradox of No Choice
In 1985, Wendy's ran a memorable, minute-long spot, "The Soviet Fashion Show." The point was that, in Communist Russia, women had to wear the same, bland, grey outfit for day wear, evening wear, swim wear... the model came out to the catwalk several times, wearing the same outfit with different accessories (a flashlight for evening wear). Each time, the MC would say, "very nice."
The ensuing burger logic was that, at Wendy's, diners had many choices among fresh toppings, unlike fashion in the USSR. This was the identical logic as the "hold the pickle, hold the lettuce, special orders don't upset us" commercial from Burger King a decade earlier. Both commercials labored to distinguish their variety from McDonald's assembly line approach to fast food.
The Wendy's commercial came to mind when I was reading a recent Economist ($) piece about the Trump administration's beloved tariffs:
Whereas once American shoppers were spoilt for choice, as domestic and foreign producers competed to sell to them, now firms that succeed will do so not only because they are the most innovative, but also because they are cleverest at playing the system. Fortunes will be spent on lobbying. Companies will face needless uncertainty. Shoppers will lose out on innovation and choice. But because the counterfactual world where trade flowed unchecked cannot be observed, voters may not realize what is hurting them.
That is one reason why the Trumpian system will be hard to dislodge. If future presidents want to cut tariffs, they will be met by furious lobbying from American firms that got used to sheltering behind them and have thereby become globally uncompetitive. Few consumers will clamor for change, if they do not know how much more choice they could have enjoyed.
This is high orthodox free market capitalism. I'm not quoting it because I agree with it, but because I think the narrowing of choice thesis is interesting, particularly the last point about how consumers (a wretched word) won't ask for more if they don't know that there is more to be had.
It is important to connect this tariff-driven narrowing of choice with another narrowing of choice that AI is driving. This is developing in two related ways.
The First Way: AI-Driven Search
As numberless recent articles have explored, AI-generated search results tend to present an answer rather than a range of answers. If you ask Perplexity, as I did earlier, to identify the burger chain that had the Soviet "very nice" theme, the AI will cough up a tidy essay about the question that includes links.
When I posed the same question to Google, it yielded 10 pages of search results, many of which linked directly to the ad in question, but it was messier. Above the mess, Google placed a short, AI-created essay, but it wasn't as concise or clear as Perplexity's.
For a short time, analysts were convinced that Google was going to lose its grasp on our search behavior altogether, going down like a punch drunk fighter in the seventh round after knockout blows from Perplexity, ChatGPT, CoPilot, etc.
Instead, Google pivoted, introducing its own "AI mode."
In an intriguing moment, when I searched "I need AAA batteries" using Google's AI mode just now, it returned seven local stores in my town where I might buy them. It did not suggest Amazon or any other ecommerce retailer. When I shifted to Google's typical mode, Amazon popped right up, along with a lot of extraneous information about batteries.
Google's AI mode (I'm guessing here) detected urgency in my use of the word "need," and therefore suggested stores where I could go today to buy batteries, instead of waiting for delivery. AI narrowed my choices compared to the typical mode.
The Second Way: Agentic Commerce
I've written about Agentic AI in general and at length elsewhere; agentic commerce is a subset.
With agentic commerce, we will outsource the purchase decisions that we decide are unimportant (which is most of them) to AI pals who will make sure we always have the right dogfood, our preferred kind of laundry detergent, milk, etc.
Kiri Masters, in her Retail Media Breakfast Club newsletter, has done a nice job of exploring how Agentic Commerce is likely to change shopper behavior and why that's bad news for retailers and their media networks.
The Bad News
In his remarkable book How Brands Grow, Byron Sharp deflated a lot of marketing nonsense and boiled brand success down to two things: potential customers need to 1) know that a product exists and 2) be able to buy it easily.
With the combo-platter of tariffs and AI, it will be harder for us to discover new products because we probably won't know that they exist (strike one).
If we do know that they exist, then we probably won't have an opportunity to buy them because of tariffs (strike two).
Plus, with the economy about to experience turbulence (just look at any reputable news source), we probably won't be able to afford them anyway (strike three; we're out).
Is There Good News?
It is possible that the twin narrowings of choice will be a boon for traditional retail. If shoppers find that they aren't stumbling across new products online, then they might venture out to brick and mortar stores for the purpose of entertainment rather than necessity.
I'm probably wrong about this, but I hope I'm right.
Thanks for reading. See you next Sunday.
* Image Prompt: Create a photo realistic image. Hovering above the image in cheerful font is the word "Variety!" On a table below are a group of seven identical jam jars, each with a white label that has only the word "Jam" on it in black font.
It's hard to believe that after so, so long, brands and those that aid them don't use mental and physical availability as a starting point. Disagree with Sharp if one must (some people who have been quite successful in this business, though they do not have reputations of being thinkers, have said to me they think he's just plain wrong about everything), but he's right about that.
I think your prediction of of narrowing is 100% spot on and one can gather how web 3.0 will unfold from this. Since almost 75% of internet browsing is done via smart phone and the major smart phone companies are folding in AI search to essentially replace web searches on mobile, it only figures that there will be huge consequences from this: websites will lose traffic; paid web advertising will switch over to and even more costly scheme of paid AI search advertising, which will mean further narrowing of internet content; and a handful of AI companies will be the gatekeepers of what news, information, shopping, and truth gets found on the search. The regular web will still exist but without decent, non-biased search engines it'll make one's website about as effective and easy to find as sites were in 1995. This will be made worse by the major social media websites opting to show ads and AI slop instead of user posts. In regards to artists and creatives I fear that our singular web presences will be lost in this chaos. Overall, it forces one to consider pre-internet options for promotion and information distribution. Perhaps this will be a blessing in disguise and create a renewal in the interest in Books, magazines, and newspapers? One can only hope.