During the last 30 years, retailers have made considerable progress on the supply side developing sophisticated systems to streamline product distribution. A lot of energy and effort has been focused on the supply of goods.
The bad news is that we have not done the same on the demand side. Retailers continue to have difficulty creating shopping environments that engage the shoppers' needs and convert these desires into purchases. One major issue is product proliferation and duplication. Manufacturers rely heavily on line extensions to increase volumes, and retailers often falsely believe that stocking more SKUs drives sales.
This has led to an explosive increase in the number of products. Before a normal dairy department might have 9 SKUs, while today a dairy department in a hypermarket might have up to 600 different SKUs. Today's supercenters can have up to 100 000 SKUs in their assortment.
The modern retail has made it difficult for shoppers to find their way around stores and around different brands. In the future we will have to trim the assortment and give the shopper better help and guidance in-store.
The Shopper Marketing article series from Ecolean shares interesting shopper insights from the FMCG world. We also share some tips on how to leverage packaging in the in-store battle.