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SKU rationalization is a hot topic in consumables. With space at a premium, and pressure to make every inch of shelf space profitable, retailers are rethinking their grocery assortments.
French grocery chain Carrefour SA recently announced plans to cut 15% of the company’s food products in an effort to simplify shopping and boost profits. As part of its Customer Centric Retailing program, Walgreens also is simplifying its assortment and enhancing product adjacencies. A recent report, “The Next Generation of Shopper Marketing,” from SymphonyIRI Group, cautioned that trimming selections can be tricky and noted that several retailers, including Walmart, have reduced product assortment “only to reinstate some products in response to unfavorable shopper response.”
Trip mission as % of dollar sales by channel
|GROCER||MASS AND SUPERCENTER||DRUG|
|Special purpose (1-5 items)||12.0%||20.9%||29.6%|
|Quick trip (2-10 items)||18.4||16.0||53.5|
|Fill-in (5-15 items)||19.2||23.6||15.7|
|Pantry stock-up (15+ items)||50.4||39.4||1.2|
SymphonyIRI’s research revealed that consumers are more focused on deals and promotion than on assortment—a key point for retailers whose formats can only accommodate a limited selection. And while the drug channel has been steadily expanding the space devoted to consumables, retailers who give more thought to what they are putting on the shelves and how it’s merchandised will have the most profitable consumables sections.
Research indicated that consumers want to simplify their shopping experience—in fact, SymphonyIRI’s report revealed that 80% of consumers said they want a “simple shopping experience,” and 71% are looking for easier-to-find in-store specials.
Manufacturers are working with drug stores to help them make the most of their space with better-merchandised sections. When drug retailers merchandise baked beans next to cornflakes, they are missing the message. “Our research showed that 33% of consumers want displays that include all the ingredients for a meal,” said Sue Viamari, editor of Symphony IRI’s Times & Trends. “Drug stores can’t do that, but they can merchandise a handful of quick, easy meal solutions on an endcap and tie that endcap into their circular.”
Campbell Soup Co., for example, is working with stores to make the soup category easier for consumers to shop, with new layouts and improved labeling. “Consumers want the ability to very quickly buy what they need,” said Phil McGee, director of category management and shopper insights at Campbell. The company’s redesigned labels on condensed soups and IQ Maximizer cards make the soups easier to identify.
When consumers shop drug stores for food, McGee said, they either have an urgent need for an item or are looking for convenience. “Some consumer purchases in drug stores are value-driven, simply a response to good deals the store is offering. Consumers may come to the drug channel as a convenience just before they go to the grocery store for a larger shopping trip. The drug channel has an opportunity to preempt that second trip and be more than a light fill-in occasion.”