Over the last few months there have been increasingly frequent noises about retailers wanting to reduce both their branded and own label ranges. For example, Wal-Mart announced plans to cut their total product count by 15% in the US and up to 30% in the UK as part of a five-year strategy calling for improved layouts and reduced inventory.
With increasing pressure on manufacturers from retail buyers to reduce range or at the very least to provide a strong commercial argument to justify the status quo, what can be done to ensure that the right decisions are made, not only for the retailer but also the manufacturer and the shopper? We suggest that they approach the challenge of turning a range that delivers against category targets into a merchandising plan that meets retailer and shopper needs by working from a much better rounded knowledge base.
Sales data is obviously a valuable start point, but it is just that – a point from which to start understanding the range issues. By getting a better understanding of the why, how and what of shopper behaviour in support of the sales data, businesses will be in a better position to answer ranging challenges with deeper insight.
Essentially, further data that explains how shoppers buy, and the context to purchasing is required. It’s critical that retailers measure the influences on purchasing so that they can predict changes beyond switching data and assess the perceptions of the category as a whole.
For example, of the lower selling products, which ones deliver retailer differentiation and which create a credible range for them? Which support a brand portfolio strategy and which products visually standout to help shoppers find key brands?
It’s a complex task and balancing a range through product reduction to facilitate ease of shopping is one challenge, but of equal importance is:
- Creating a shelf (or category or merchandising) layout that will attract attention to new or added value products
- Providing ideas about product usage
- Generating inspiration by making it interesting to shop
- Tempting shoppers in the category to buy something they hadn’t planned to buy
Sales data alone will not give enough understanding to enable businesses to achieve all of this. Retailers need to look deeper.
Of course, each product category will have a different role to play for both the retailer and the shopper and each category is catering for multiple missions within and across store formats.
With increasing pressure on the major retailers from emerging channels – such as the discounters or online – and the shopper’s changing desires of where they would like to shop from (e.g. farmers markets or specialist stores), the question is not just about culling products to reduce the range, it is about creating the right range going forward so that it delivers sustainable category growth.
So what to do?
Retailers are sophisticated businesses and they know that by understanding shoppers’ perception, awareness and consideration of brands in the context of in-store visibility, engagement and sales that they can then profile brands and compare them against key competitors. Once the various profiles are understood it is then possible to determine if the product, brand or sector in question provides a key dimension to the range that would be missed by shoppers, if it were removed.
As a result, by looking beyond sales data, businesses are able to define a range that meets the needs of today’s shopper and drive tomorrow’s aspirations and value triggers for the future strength and growth of the category.