Meeting the challenge of range reduction and delisting
Big retailers are increasingly focusing on streamlining the ranges of products they stock. One driver of this trend is the success of discounters Aldi and Lidl who typically only stock a quarter of the lines of traditional supermarkets (eg 7,500 rather than 30,000). Another is the increase in the number of smaller, quicker shops in smaller format supermarkets – which by their nature can only carry limited ranges – at the expense of big shopping trips in large out of town stores.
If retailers are looking to rationalise range there is clearly a challenge for brand owners. This raises the question as to what are the most effective responses when there is pressure to remove lines or even entire brands from a fixture?
One approach is to demonstrate the value of your brand to the retailer by quantifying the lost sales value as well as the attitudinal impact on perceptions of the retailer in terms of range, quality and likelihood to use if customers can’t find ‘their’ brand. With more consumers spreading their shopping across different retailers they may choose to purchase in another store rather than switch brand or product within the fixture.
An alternative approach is for brand owners to revise their offer to meet this new reality. For example, products have been redesigned to meet multiple needs and thus one SKU can replace two SKUs which were each directed at different needs. Another example would be the use of compact packaging which allows you to concede ground on shelf space whilst retaining more of the range in that reduced space. This is particularly relevant for bulky categories like multi-pack snacks.
These reductions in range or shelf space whilst fundamentally maintaining the quality of offer can be a ‘win win’ for retailer and brand owner.
There are also commercial arguments where you are a secondary brand about your presence in store being to keep the leading brand honest. If they delist you entirely leaving just the leading brand (and private label) the retailers’ negotiating position on things like promotions and price are greatly weakened with the brand leader.
As experts in range optimisation and product development Incite are ideally placed to work with brand owners with this issue. Our flexible thinking and approaches can help protect current listings or to innovate against the changing opportunity.