The two ends of shelf space
First, inflation is at an all-time high, and a recession is knocking on all doors. In fact, some say that inflation is now the new normal for retailers and manufacturers. Making better decisions to stock better products for consumers while increasing growth is a key concern. A focus on product functionality can be the main driver of product selection, by retailer and consumer alike.
The second determining factor is a challenge that has existed since the beginning of retailer existence: limited shelf space. Once you’re on the shelf, your next move is to start taking more space to increase sales at that retailer.
Here are the four product mix considerations you should keep in mind.
Your product in the mix
1. Keep a constant watch on the retailer data
From this vantage point, your product’s success in the category is not as important as your success with the retailer. Keep your focus on your key retailers and look at how much product that retailer moves, how much your competitor moves, and how much you move. If your products have a better sales velocity than the competition, increasing your shelf space will help the retailer make more money, faster.
2. Sort out your cannibalizing products versus incremental value products
A key part of a successful strategy is ensuring that your assortment is optimized and properly built for sustainable growth. At face value, the equation is simple: reduce the number of cannibalizing SKUs and free up space for products that are profitable and driven by consumer demand.
Using the right data, you should:
- Understand how the average consumer shops the category and see what the key product attributes they’re after.
- Dig deeper to see the most incremental segments and identify opportunities for expansion.
- Determine the ideal combination of products of optimal growth opportunities based on different KPIs.
3. Take a second look at your pricing strategy
Introducing new products that answer consumers’ needs while offering various flexible price tiers within a brand portfolio can be achieved with precise sales performance prediction capabilities.
4. Protect your revenue
Out-of-stock is an unfavorable situation for all involved—the consumer, the retailer and you, the manufacturer. Knowing what is missing because of supply chain disruption is the key to acting quickly and keeping shelves full of the products consumer’s demand.
Sometimes, however, production circumstances can be out of our control. In this scenario, make sure to partner with your retailer and work out a communication plan to set the consumer’s expectation on how long they will wait for stocks to be replenished. Doing this will fortify your relationship with both your retailer as a business partner and your consumer as a reliable provider.