Optimizing retail assortments is a key factor in the commercial success of a store and a brand.
However, finding the right balance between meeting consumer expectations and maintaining high profitability can be complex.
For this reason, negotiating and optimizing assortments in supermarkets requires constant, meticulous analysis of various factors such as the nature of the product, the location of the point of sale, seasonal variations, the ability of consumers to buy the product...
This article will guide you through the various stages involved in creating an optimal assortment for supermarkets.
Depending on the retail chain in which you're going to distribute your products, you won't be implementing the same strategy.
Beyond changing your offer, price or even packaging, you need to distribute your products in stores that match your brand image. Not all products are sold in all stores.
Also bear in mind that some chains want exclusivity on certain brands. This doesn't necessarily mean that you can't be sold anywhere else. Nevertheless, to attract a target clientele and differentiate themselves through their offer, some stores or chains require exclusivity on a range or product, which cannot be included in other assortment plans.
Sales targets vary between you and your distributors.
While you want to align your stores' offering with your sales targets, retailers are looking to satisfy consumer demand and maximize profitability. When putting together assortments, it is above all the ability of consumers to come and buy the products present in the store that is taken into account. For example, socio-professional category is taken into account: if a store's main clientele is CSP+ households, it will be able to stock more expensive products.
The challenge lies in the price/volume effect for the store:
Their challenge is to satisfy customers' needs while minimizing shopping time. With limited sales space, store managers are looking to maximize their profitability per square meter.
In addition to these divergent objectives, there is the question of product quantity. The quantity of products in the assortment depends on market share (MSP).
For example, if tomato sauce has a market share of 10% in a given department, it must represent 10% of that department's assortment. When creating assortments, distributors also take into account the market share of each brand.
And PDM is important for maintaining sales! To better understand this, let's take a concrete example:
In France, ham has a 25% share of the charcuterie market.
Among brands selling ham, brand 1 has a PDM of 15%.
Naturally, ham accounts for 25% of the charcuterie aisle. Among the brands that sell ham, brand 1 accounts for 15% of the aisle.
This department sells an average of €10,000 / week, or €480,000 / year.
The ham PDM represents €120,000 in sales / year and the brand €18,000 / year.
Except, that's not always the case.
The store didn't take into account the ham's PDM. It then allocates only 20% of the shelf to ham. The remaining 5% is then reallocated to pies, which normally only have a PDM of 5%.
In this case, the volume allocated to the pie is greater than the volume used up.
Sales of pâté en croûte are €24,000 / year.
Ham sales are down to €96,000 / year (-20% of sales on the shelf / year).
Brand 1 sales are down to €14,400 / year (-20% sales / year).
It's a lose-lose situation for everyone, even though the PDM of brand 1 has not changed. But the latter can go up as well as down in the assortment.
The PDM of ham is well respected and achieves €120,000 in sales / year. But brand 1 is losing 5% to brand 2, which normally only has a 5% market share.
Brand 1 will therefore generate sales of €12,000 / year for the store on hams.
Brand 2 generates sales of €6,000 / year for the store.
In this case, the volume allocated to brand 2 is greater than the volume sold. Due to poor assortment in the department, the store loses €4,000 and brand 1, €6,000.
It's important to understand that if one or more flagship products are not present, then the department will lose sales volume, which will also impact the producer. Producers and distributors are not in competition. Quite the opposite: they are allies, with the common aim of increasing sales. If one earns more, intrinsically, so does the other.
PDM, based on reliable external data such as IRI, is a good way of explaining to your distributors how, by increasing your presence in assortments, they can gain in sales. Indeed, if they allocate the missing PDM to another product, they can have more breakage, especially when it comes to fresh products like ham!
It's important to note that sales figures can vary from region to region. For example, galettes and crêpes have a much higher MDP in Brittany than in Auvergne.
Finally, the type of assortment will change according to the type of retailer. For example, Lidl and Monoprix do not base their sales strategy on the same criteria, and therefore do not sell the same products. What's more, within the same chain, strata or modulation will affect the width and depth of the assortment.
This is what we're going to look at together in the rest of this article.
In supermarkets, assortments refer to the variety of products available for sale in a store. Assortment types are generally classified according to the width and depth of the product ranges on offer.
In all, there are five types of supermarket assortment.
A retail assortment plan is a detailed strategy that defines which products will be sold in a store or chain of stores. This plan is essential to ensure that product choice is available to meet customers' needs and preferences, while maximizing the profitability and efficiency of the sales space.
Here are some key elements of an assortment plan:
There are three types of supermarket products:
Today, supermarkets offer an average of between 7,000 and 10,000 items. Hypermarkets offer between 10,000 and 30,000 items. The current trend, however, is for chains to optimize their use of sales space.
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This can result in a more limited selection of products, favoring those that offer a quick turnaround. What's more, the number of new brands and references on the market is exploding, and the growing presence of private labels is further reducing available shelf space.
Sales space is a precious resource, and there isn't room for everyone. And it's mainly the second type of product (other national brands) that's taking up most of it.
So it's vital to select products that guarantee fast turnover and high profit margins. According to Nielsen research, fast-moving products can contribute up to 80% of a store's total sales. By concentrating the assortment on these high-demand products, stores can maximize profitability while effectively meeting customer needs.
Well-orchestrated inventory management is crucial to maintaining the availability of the most popular items, while avoiding surplus. According to McKinsey & Company, optimized inventory management can increase sales by 2-5% and improve gross margins by 5-10%. This involves a balance between consistent product availability and the reduction of overstocks or out-of-stocks.
Regular assortment adjustment is a fundamental element in guaranteeing the relevance and attractiveness of the in-store offering. This involves constant evaluation of product sales performance, and close attention to customer feedback and changes in buying behavior.
The key is adaptability. By frequently revising the assortment based on your analyses, you can adjust your offering to better meet current market expectations, and therefore sell more. This strategy ensures that the product range on offer remains not only attractive, but also perfectly aligned with consumers' needs and desires.
A well-tuned assortment reflects a deep understanding of the market and consumer trends, maximizing the effectiveness of product presentation and customer satisfaction, while optimizing sales performance.
