Retailers, CPGs Divided on Assortment Priorities

Retailers and manufacturers are divided on assortment priorities -- retailers are focused on category innovation through new product development, rationalization and planogram design in their assortment reviews, while CPG manufacturers are keen to drive revenue by increasing distribution and listing opportunities with products that already exist.  

These are among the findings of the third-annual category management survey by omnichannel software provider Symphony Gold.

Seeking to benchmark approaches to category management, Symphony Gold surveyed more than 250 leading CPG manufacturers from across the United States and Europe. This year’s survey identifies key forces challenging both retailers and manufacturers, such as a focus on relevant store formats is decreasing the relevancy of big box outlets and more granular assortments, and an onslaught of data that is difficult to consolidate and analyze with existing legacy systems.

Among the survey’s revelations:

Retailers and manufacturers are divided on assortment priorities – Although manufacturers globally report that 49 percent of retailers are demanding SKU rationalization and new product introduction, 48 percent of manufacturers globally would prefer to do opportunity gaps assessment and advanced trending analysis. Overcoming this division requires both parties to collaboratively review category strategy in order to transform collective insight into timely and actionable planning that is focussed on delivering profitable category growth.

Assortment recommendations are becoming more granular – Globally, 31 percent of manufacturers report that assortment and space recommendations are made at total retailer level. This number increases to 36 percent in the U.S. but drops to 22 percent in the United Kingdom, with a similar number (23 percent) providing plans at a more granular fixture level. While this indicates the depth at which manufacturers are required to provide assortment and space recommendations to retailers, it also reflects the different retailing landscapes. As format expansion increases, manufacturers in all markets will be asked for recommendations at store and fixture level in addition to banner level.

Collaboration – U.S. and U.K. respondents were more likely to describe the retailer-manufacturer relationship as mostly collaborative (46 percent and 40 percent respectively), while in mainland Europe, this number drops to around 25 percent. However, as shoppers come to expect greater product availability and more relevant assortments, closer collaboration represents an opportunity. By embracing a more collaborative approach internally and externally, retailers and manufacturers can improve the connection with their customers and drive a more cost efficient category management process.

Time-Consuming Data Consolidation -- The majority of manufacturers (27 percent) report spending three to five days consolidating data to support category insight, with a further 26 percent spending five days on the task. Consequently, actionable insights are elusive and organizations are unable to respond quickly to market and consumer needs. A cloud-based category management solution enables retailers and manufacturers to assimilate data from multiple sources and create a single access to the truth, which will become more imperative to speed time to decision in the future.  

“This year, the key factor is the need to increase collaboration between retailers and manufacturers in order to get closer to customers and drive more business growth,” said Matt Robinson, Symphony Gold’s director of solution marketing. “Organizations who are winning are those that invest in solutions that not only integrate data with technology, but that connect people and processes with the capabilities necessary to increase category growth and employee productivity.”