Spoiler alert: Pandemic-induced streamlining is here to stay
By Andy Kriege, YSN
Manufactures across a wide range of categories have downsized the number of product offerings during the pandemic to help mitigate supply chain disruptions.
But despite the subsequent easing of logistical issues in most industries, the reduced product choices show no signs of coming back anytime soon. The trend can be seen across a wide array of consumer goods including groceries, health and beauty and furniture.
Shelf Engine, a technology company that automates ordering for grocery retailers, said large grocery stores have reduced fresh-food offerings such as fruit, dairy products, and deli meats by as much as 15% to 20%. Large grocers are now cutting back and are reversing a pre-pandemic trend wherein they believed they needed to carry every conceivable item, lest they lose customers to the large grocer down the street.
As Shelf Engine CEO Stefan Kalb recently told The Wall Street Journal, grocers are now saving money because they have fewer items to manage and the slimming of product options is reducing food waste.
Manufactures Say Less = More Efficiency
Another example of SKU consolidation is The Coca-Cola Co., which now offers half as many beverage options as it did just a few years ago. Consumer goods conglomerates like Kimberly-Clark have also drastically trimmed their product lines, focusing instead on their top-selling items. In fact, in a war-time-type effort to keep up with demand at the onset of the pandemic, Kimberly-Clark eliminated 70% of its paper products in one weekend. The bottom-line benefit of not having to constantly change over production lines to produce countless product variations has increased efficiency and lowered costs so much that the company made most of the cuts permanent.
These changes are not exclusive to consumables; there have been changes in the home furnishings category as well. According to published reports, a major mattress manufacturer trimmed the number of SKUs it produces from 20,000 to 12,000 over the past five years. Similarly, BrandSource home furnishings partner Malouf recently reduced its assortment from 11,000 product choices to about 3,500 items, Vice President Nick Jensen told the Journal.
Consumers are Shifting to Less Variety Without a Fuss
Executives from many consumer product companies view this slimming down of product lines as a strategic move to boost profitability in the face of rising costs. These industries found that offering an excessive variety of products did not make sense financially or strategically. More importantly, consumers did not seem significantly impacted by the reduced options, as retail sales have remained strong.
As YSN contributor Gordon Hecht observed in a recent column, “ALDI stores operate in a 15,000- to 20,000-square-foot selling space, compared to most supermarkets’ average of 120,000 square feet … ALDI will have just about any item you want. And they will have one choice for that item. Strawberry preserves? One brand, one size jar.”
See: Don’t Turn Your Store into a Supermarket
Hecht suggested that dealers visit an ALDIs and then ask themselves whether having less selection make shopping easier or harder. His own conclusion: A narrower selection is great for the customer and the store owner in that it eliminates duplication, confusion and wasted space.
In other words, when it comes to an endless supply of consumer options, less is more for everyone.
