Squeezed – Marketing with Less Shelf Space

July 6 2009 | Kathy Crosett

Shoppers at grocery, drug and discount stores are noticing a new trend – fewer types of products on the shelves. And this trend is expected to continue. According to a Wall Street Journal report, the typical retailer will decrease the number of offerings by up to 15% this year. This change means manufacturers face a bigger challenge getting their products into the hands of consumers. And the shift could disproportionately affect smaller manufacturers who are always looking for ways to take market share from well established industry leaders.194284_candy_racks

Some manufacturers believe there’s a new attitude about the retail environment  - one that indicates consumers are confused and bewildered by the number of choices in stores – think toothpaste and shampoo. Others believe the cutback may be temporary because of the recession.  To maintain their relationships with retailers who cannot sell  at the same level as before, manufacturers are cutting back on the range of products they offer and believe they’ll make up the difference in increased sales of fewer variations of similar products. But what if you’re having trouble getting your product back on the shelves or onto retailer shelves in the first place? The article highlights how salespeople from Church & Dwight met with retailers and presented hard data about consumer preferences and sales trends in order to get their product back in the stores.

The takeaway lesson from this new trend may be the need to increase marketing promotions with your retailers, especially trade promotions, and to be prepared to stay in close touch with decision makers at retail locations.

[Source: Brat, Ilan et al. Retailers Cut Back on Variety, Wall Street Journal,  6.26.09]

 

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  • http://www.hurlbutassociates.com Ted Hurlbut

    SKU rationalization, or narrowing assortments, is the inevitable outgrowth of the recession and retailers having to scale back inventories to reflect sales declines. Allowing inventory turn to creep up in this downturn is a hidden drain on precious cash flow.

    When sales drop, items and categories that were once viable, that sold enough units to justify the necessary investment in inventory, suddenly no longer make economic sense. These are the items and categories that must be pruned as assortments are narrowed.

    What retailers are learning from this experience, however, is that they probably didn’t need as much assortment all along. It’s not always easy to quantify internal competition between SKU’s. So what started as a necessary response to the recession is likely to have a much longer term impact on retailers, manufacturers and consumers.