The CPG industry has been abuzz over assortment downsizing, says a recent report summarizing the March 2010 "Nielsen Retailer Assortment Survey." Yet, despite all the talk of major SKU reductions, the average food channel store decreased variety by just 1% in 2009. The majority of grocery retailers plan to either maintain current levels or continue slimming SKU count in 2010.
According to the study, 40% of food retailers surveyed claimed to have decreased assortment roughly 5% on average. One-third of retailers claimed to have maintained the assortment status quo, while 22% claimed to increase assortment options an average of 3%.
Retailers' Assortment Strategy 2009
% of Respondents
No unified approach
Source: Neilsen Retailer Assortment Survey, March 2010, (Published June 2010)
It's a tricky balancing act, concludes the report, noting that assortment challenges vary by format, region, category and brand, but the objective is the same: satisfy the shopper need for choice and innovation without an unmanageable sea of SKUs. In 2009, four out of ten food retailers surveyed claimed to have decreased assortment roughly five percent on average. One-third of retailers claimed to have maintained the assortment status quo, while 22% claimed to increase assortment options an average of 3%.
Among the many reasons fueling the frenzy, 60% percent of retailers indicated they downsized to alleviate shopper confusion. The other reasons cited were mostly internally-driven operating decisions including:
More than half of those retailers surveyed in the 2010 Nielsen Retail Assortment Survey claim to have, or plan reductions of up to 10% of all SKUs on the shelf. Even as redundant products were eliminated, certain segments saw their product counts increase. Store brands enjoyed a 2% expansion over the prior year, while premium national brands held their own, avoiding cutbacks. Despite anticipations of double-digit assortment decreases, the actual total percent of item changes for the year across major categories in the grocery channel averaged a very reasonable 1%.
Brand Additions and Deletionsin 2009
Change vs. 2008
Economy national brands
Premium national brands
Source: The Nielsen Company, June 2010
According to the Nielsen study, of the 32 categories analyzed, 23 experienced an average decrease of 2% in the number of items offered. The biggest losers which saw the highest number of items removed from the shelf. were:
Concurrently, the biggest winner categories expanding SKU count included carbonated soft drinks (up 3%), shower gel and yogurt, each growing its product roster by 6%.
More than 90% of retailers who claimed to have reduced assortment made their decisions through simple reductions in variety, designed to get "rid of low hanging fruit." by getting rid of flavors, pack sizes, etc. within brands, while almost 70% targeted third and fourth tier brands.
One of the major pitfalls to overly aggressive de-listing is consumer response, says the report. Shopper attrition is a major retail concern, indicated by 77% of retail respondents in Nielsen's 2010 Retailer Survey, since achieving even a one-half percent improvement in shopper closure across the grocery channel translates into an additional $1.5 billion in sales.
Over half of the respondents in the 2010 Survey said they are less likely to shop a retailer if they perceive a decrease in assortment. But loyalty varies by product category, with the consumer more brand loyal within categories of a more personal nature.
Response to Inability to Find Product Desired
% of Respondents Purchasing Nothing (in Category)
Household & Paper
Source: The Nielsen Company, PanelViews Survey, January 2010, (June 2010)
The report concludes with the admonition that "... success lies with offering the right mix of products, not the greatest or fewest number of products..."
For additional information, please visit Nielsen here.