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How rationalisation in a Range Review can be a positive

  • Writer: David Comport
    David Comport
  • Mar 12
  • 3 min read

“Range Rationalisation” usually makes FMCG suppliers nervous.


Fair enough: Unplanned deletions can have a major impact on in-year sales delivery, factory volumes, inventory, and even brand support plans. However, a proactive, category-centric range rationalisation process can have positive outcomes for suppliers alongside retailers, creating more efficient ranges, improved shopping experiences, greater impact of innovation at shelf and streamlining cost and management effort for both parties.


Whilst others argue, wheel and deal to try to rescue each and every vulnerable SKU, stepping back to consider the bigger growth picture, and helping your buyer to navigate through the process, could help you become a standout partner and supplier of choice within your category.


Remember, retail buyers are also tasked with achieving profitable growth within the operational challenges they’re faced with, so they will be anxious about making the right decisions too! Working together during a rationalisation period can be a great partnership opportunity.

3 people having a strategic alignment discussion meeting room
Category Strategy allows you to align on where profitable future growth will come from.

So, what are the keys to successfully navigating range rationalisation?


1. Align on where profitable future growth will come from

A good Category Strategy uncovers the drivers of future category growth for the next 3-5 years: It identifies the category segments that are going to become more, and less, important to shoppers in the future.


Like their suppliers, FMCG retailers seek to understand current and evolving consumer and shopper needs - shaping their ranges accordingly. The more you participate in those conversations with your retail customers, adding value through data and insight, the more confidence they will have that your category has growth potential and that you know where to find it.


Retailers will often look to focus their growth plans in-line with the growth opportunities they know their suppliers are committed to investing behind, rationalising where an opportunity may exist but no-one is prepared to invest behind it at this time.

2. Lean-in on uncomfortable internal conversations

With segments of future growth aligned, you can identify the SKUs within your brand portfolio that are, and will continue to be, challenged for growth. Whether today or tomorrow, it is reasonable to expect that they will not make the rationalisation cut. Having these conversations early and pre-emptively, within your internal team enables better risk management as range reviews approach. Implications and priorities can be better understood, and some of the negative impacts of deletion (excessive raws, packaging, inventory etc) may even be mitigated. Managing the tail in your own portfolio will usually result in a better business outcome than reactively dealing with the situation after the fact. Moreover, it demonstrates genuine belief in your strategic direction and choices, building trust and credibility with your retail customers.


Your innovation and investment should then be tipped towards areas of the category which are drivers of category growth in the future, rather than those that will be less relevant and exposed to future rationalisation


3. Rationally evaluate through the lens of category shoppers

With the big picture aligned, and your business prepared, you can work through the targets and options for rationalisation objectively with the retailer, keeping shoppers front-of-mind. Be sure to consider each of these:


Shopper Decision Hierarchy: How is the category broken down into sub-groups or segments? What are the discrete segments, without which shoppers will be lost?


Substitutability & Variety: Within each segment, how likely are shoppers to switch from one product to another? What happens if a particular product or attribute is not available? Do shoppers purchase multiples or often? How much choice do shoppers require?


Value tiers: Does removing a particular product cause a trade down in value amongst substitutable range? Does retaining it result in a trade-up?


Shape the Future, don't be Shaped by It


Whilst this approach won’t save all your SKUs in your portfolio today, it does give you a clear runway for future range development and set you up for longer-term range review success.


The earlier you can embark upon an aligned strategic category approach with your customers, the better. Range reviews are busy and stressful times for retail buyers and if you've left it until the review, you've left yourself little time to explore and align perspectives this time around. However, Strategic Category Management in FMCG is a journey, not a destination, and if you haven't started yet, there is never a better time than now.


Why Real World Marketing?


Our experienced consultants and trainers are FMCG leaders who have guided some of the brightest minds in our field. With deep-rooted expertise in the consumer goods industry, we are well-placed to support you and your teams as trusted coaches and mentors, tailored to your unique requirements.


If you need assistance with how to get started with a Category Strategy, please reach out to one of the team at Real World Marketing.


We’re here to help you navigate complexity and achieve your business goals.  




 
 
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