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Retailers
Cut Back on Variety, Once the Spice of
Marketing
By ILAN BRAT, ELLEN BYRON and ANN ZIMMERMAN
For years, supermarkets, drugstores
and discount retailers packed their shelves with an
ever-expanding array of products in different brands,
sizes, colors, flavors, fragrances and
prices.
Now, though, they believe less is
more.
Pharmacy chain Walgreen Co. is cutting the types of superglues it
carries to 11 from 25. Wal-Mart Stores
Inc. has decided that 24 different tape measures is 20
too many. Kroger Co. has
tested stripping out about 30% of its cereal
varieties.
In the next year or so, these and a
few of the other largest retailers are expected to slice
the assortment of products in their stores by at least
15%, industry executives and analysts say.
This is a challenge for
manufacturers, who have grown accustomed to churning out
incremental variations on popular products to maintain
shelf space and keep their brands fresh in consumers'
minds. For consumers, the shift means less variety but
also less trouble sorting their way through a
sometimes-bewildering variety of offerings.
Retailers' drive to simplify is a big
shift in the trillion-dollar consumer-products sector.
Both retailers and manufacturers long agreed that bigger
selections were better, especially when the economy was
healthy and consumers were spreading their
grocery-shopping trips around two or three
stores.
Now retailers are cleaning up the
clutter. They are trying to cater to budget-conscious
shoppers who want to simplify shopping trips and stick
to familiar products. Retailers have found that
eliminating certain products can lift sales and profits,
in part by cutting excess inventory and making more room
for house brands.
"All that go-go 1990s where we were
adding items in and adding items in, and people wanted
more, more, more, more choice... just didn't pay off,"
said Catherine Lindner, Walgreen's divisional vice
president for marketing development, at a recent
conference. Looking at store shelves, "People say,
'Whoa, you're bombarding me. Help me figure out what I
need.'"
On a recent afternoon, at a
supermarket in Chicago, Laura Gilligan confronted a
salad-dressing aisle filled with dozens of varieties
spread across two dozen brands. After staring for nearly
a minute, Ms. Gilligan, a computer-company manager,
chose Kraft
Foods Inc.'s
cucumber-tinged light ranch. "There's too many choices,"
she said. "I just went with Kraft because I know
Kraft."
As that reaction suggests, the shift
to fewer items could lead to a shakeout on the shelf, in
which No. 1 and No. 2 brands win more space, and
therefore sales, from No. 3 and lesser
brands.
Household-products giant
Procter &
Gamble Co. has been
touting shelf simplification as an advantage. "We
generally end up with share and sales growth, and it's
all, of course, a lot more profitable and returns a lot
more cash," said departing P&G Chief Executive A.G.
Lafley at an investor conference last month. "It
benefits the leaders in the industry and it
disproportionately benefits P&G."
Campbell Soup Co., which is dominant in canned
soup, expects to gain about 10% to 15% more shelf space
at large retailers this fall, said a spokesman, mostly
for its top three sellers: condensed tomato, chicken
noodle and cream of mushroom.
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Source: The Wall Street
Journal | 
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