The decision by Tesco to reduce the number of products it stocks by up to 30% in an attempt to cut costs and make the weekly shop simpler will place even greater pressure on suppliers to ensure their range review processes are among the best in their categories.
Bridgethorne, category management specialists, says many FMCG manufacturers risk losing out because they fail to take the initiative in range reviews and risk of having their products de-listed, reduced in distribution or losing space on-shelf as a consequence.
The decision by Tesco came after it was revealed that the shoppers had a choice of up to 90,000 products from which to buy weekly. With tomato ketchup, Tesco offers a very broad range of 28 SKUs, compared to Aldi where there is just one ketchup in one size; 13 different varieties of aluminium foil and white bread, where Tesco offers 50 different loaves. It has been reported that Tesco could reduce the number of lines it stocks to between 65,000 and 70,000.
Bridgethorne claims too many manufacturers enter the range review process focused on the factors of greatest importance to their own businesses rather than addressing issues of importance to the retailer. The current Tesco situation highlights this perfectly, it says.
“With shopper traffic passing only 30% of stock on shelves and then spending just one minute in each aisle you can see why aretailer like Tesco needs to get its ranges absolutely right and minimise the risk of lost sales,” said Bridgethorne co-founder John Nevens.
“Retailers want to see manufacturers offering genuine consumer and shopper insights and evidence of real brand innovation. They are increasingly looking to their suppliers to make informed recommendations on everything from range and distribution to promotion strategy and space optimisation. To show how their recommendations will lead to incremental growth for category and retailer.”
Range reviews for example, Nevens adds, are regarded by multiples as a vital tool in their effort to become the retailer of choice for shoppers in an increasingly competitive market.
“Retailers want suppliers to help them ensure their ranges offer the best choice for shoppers while delivering the maximum possible return. They want to understand what new products shoppers want and in so doing to optimise their return from the space they have available.
“If suppliers help retailers achieve this they may benefit from the process as well. It will ensure the categories in which their products sit are ranged correctly so they deliver the optimal reward to their business.”
Bridgethorne said it uses its 14 years of Range Review experience to work with retailers and suppliers across different categories to ensure they maximise opportunities within the range review process. According to the company, it helps retailers optimise range and space and helps manufacturers gain an internal view of their brand and own label opportunities. Bridgethorne uses its software-based best practice tools and processes to provide a platform from which to launch new products, defend current and gain new listings, and increase distribution on lines where merited.
“It is important for manufacturers to be proactive with the range review process before it is too late, so they shouldn’t wait for ‘the’ call. Early engagement will give them the opportunity to change what they have been doing to ensure success rather than failure, to ensure the retailer is seeing and interpreting the same data as the manufacturer and, most importantly, to have that seat at the table where you are talking the same language as the retailer and moving towards a more strategic rather than tactical relationship.”