LAS VEGAS –More than half of U.S. consumers report they are likely to shop elsewhere if they notice a reduced product selection at stores, while nearly half of retailers indicate continued plans to decrease assortment, according to the Nielsen Company New at Nielsen’s Consumer 360 Conference.
Seven percent of personal care product shoppers say that when faced with a shelf that does not contain the item they want, they’ll leave the store without buying the category at all. Often, this translates into the consumer taking their entire shopping basket purchase elsewhere. While seven percent may seem like a small number, Nielsen Company noted just a one half of one percent decrease in shopper closure across the grocery channel could cost as much as $1.5 billion in sales.
So far, most consumers haven’t observed assortment changes with only 7, percent reporting a noticeable reduction in product variety. And, although 42 percent of retailers decreased assortment in 2009 amid considerable industry hype, assortments overall shrunk by only 1 percent. Looking ahead to the second half of 2010 and 2011 however, retailers’ strategies call for continued downsizing, then maintaining reduced assortments moving forward. Forty percent of retailers indicate they’ll continue to downsize, with stated targets to cut up to 10 percent of SKUs on the shelf.
According to Nielsen, 75 percent of retailers are downsizing their product assortment to improve merchandising opportunities, while 71 percent cite a desire for greater control over inventory. Sixty percent state the moves are made to alleviate shopper confusion, while 52 percent are reducing selection to cut costs and improve profitability. Nearly half (48 percent) of retailers are making more room for store brand products.
“Reduced assortments are definitely here to stay, and the message to retailers is to choose carefully when it comes to deciding which products to trim,” said Stuart Taylor, vice president, custom analytics, The Nielsen Company. “In many cases, strategically reducing assortment can result in an improved customer experience and greater profitability. Cut the wrong product, however, and the potential customer backlash could be costly.” Nielsen recommended retailers adopt an ongoing, objective process around assortment and applying intelligent analytics to help identify the products that provide the greatest incremental sales benefit.
“Success in today’s competitive retail market is no longer about having the most products – it’s about finding the right mix of products,” Taylor said. “Retailers should be focused on offering the products their customers want most and making it as easy as possible for their customers to find and purchase those products.
Nielsen surveyed nearly 50 retailers across U.S. consumer packaged good (CPG) channels and consumers in more than 21,000 U.S. households conducting nearly 55,000 shopping trips. The surveys were conducted online in March and April 2010. The company also conducted an industry assortment benchmark analysis, spanning more than 30 grocery categories.