Optimizing retail assortment to grow in the challenging reality of 2022


Optimizing retail assortment to grow in the challenging reality of 2022

Getting the shelf and aisle right is increasingly complex for retailers and manufacturers. To stay competitive in 2022, businesses need to stop being reactive, start analyzing better, make faster decisions, and proactively strategize shelf, assortment, and space approaches.

Realities of the 2022 shoppers—post Covid and inflation

Two shopper categories have emerged from the pandemic. The first group, Insulated Shoppers, was financially unaffected by Covid. They haven’t been budgeting for vacations, eating out, or spending on entertainment. But with inflation impacting our reality and bringing another layer of pressure, this can change in the upcoming months of 2022. 

The second group, Constrained Shoppers, those negatively impacted by Covid, have had to cut their budgets already in 2022. They’re making fewer trips to the store and stocking up with larger pack sizes when they do shop. The financial restriction they face every day with increased food prices may disrupt their normal shopping trips and require more precise offers in different price tiers. 

How do retailers adjust for these new consumer challenges to optimize their assortments for both types of shoppers in 2022?  

Assortment and merchandising strategies that don’t work

While manufacturers and retailers are struggling to figure out what information will work for making better assortment choices, there are a few strategies that are not working. 

Sometimes less is more on the shelf 
Some manufacturers are successful in sending more products to market and driving market share growth. However, many find that spending a huge amount of money to bring products to market creates a loss in business and market share. NielsenIQ research has shown that duplicate or similar products don’t always help. “Less is more” has never been as important a maxim as it is now.  

Shelf reset doesn’t always help 
Retailers are finding that over 50% of the shelf-reset products are unsuccessful and, actually, after the reset generate less revenue than before. Retailers are spending thousands of hours on resets that ultimately achieve negative growth.  

A ‘trading’ relationship leads to cluttered shelves 
The relationship between retailer and manufacturer can be conflicted when it comes to assortment. When that dynamic is a “trading” rather than “strategy” relationship, shelves become cluttered.  

Ideally, manufacturer and retailer would work together to create an assortment strategy that achieved shared goals. Instead, manufacturers often put marketing money behind getting as many of their own products onto shelves as possible, achieving their own narrow aims without regard to a larger optimality. This creates clutter. Retailers would benefit by shifting to a strategy beyond simply negotiating individual deals with brands, and focusing on the overall picture.  

But to do so, they need one integrated view on all aspects of the shelf and assortment architecture.  

Person refining their assortment

Make your assortment strategy work for you

While assortment is getting harder, your competitors are looking for every edge. Contact our Shelf Architect team to plan for the rest of a challenging year.

What retailers and manufacturers can do to move forward with assortment decisions in 2022 

Many retailers are hesitating to execute new plans and move forward with assortment strategies. There is often conflict among marketing, research, and sales teams over strategic overview versus the execution of plans. There is also hesitation to make decisions during what might be considered a “turmoil” period. While this is understandable, there are a few ways to move forward now.  

Look for larger store research integrated data sets 
It’s insufficient to examine research for a single store. It’s essential to find research partners who can locate data for a larger set of stores across an area. Granular data enables unique results for specific market clusters and measures them as they change—in real time. With this information, retailers can determine the unique implications for each cluster, rather than simply looking at data on an aggregate level.  

Use simulation to predict sales results  
The best way to simplify the complexity of assortment is to run simulations. Modeling software can be utilized to predict what will happen when, for instance, assortment is changed by adding or taking out items, or certain segments grow, or balance shifts toward a certain brand.  

Don’t take a wait-and-see approach to assortment 

In the challenging environment of 2022, retailers need to find ways to simplify the complexity of assortment and merchandising while accommodating different kinds of shoppers. They need to have the option to make the strategic decisions quickly, in front of their laptop, to adjust the shelf to the dynamic situation on the go.  

Rather than take a wait-and-see approach, changes on the assortment level need to be made now so that retailers can optimize and respond to inflationary pressures, consumer needs, and the effects of the pandemic. Efficient shelves means lower operating costs— which of course means more chances to stay profitable.