Tesco's decision to reduce the number of products it stocks by up to 30 per cent in an attempt to cut costs will place even greater pressure on suppliers to ensure that their range review processes are among the best in their categories, according to specialists Bridgethorne.
The company says that many FMCG manufacturers risk losing out because they fail to take the initiative in range reviews and risk having their products delisted, reduced in distribution, or losing space on the shelf as a consequence.
The decision by Tesco came after it was revealed that the shoppers had a choice of up to 90,000 products from which to buy weekly.
Within tomato ketchup, for example, Tesco offers a very broad range of 28 SKUs, compared to Aldi, where there is just one ketchup in one size.
It has been reported that Tesco could reduce the number of lines it stocks to between 65,000 and 70,000.
Bridgethorne claims that too many manufacturers enter the range review process focused on the factors of greatest importance to their own businesses, rather than addressing issues of importance to the retailer.
The current Tesco situation highlights this perfectly, it says.
“With shopper traffic passing only 30 per cent of stock on shelves and then spending just one minute in each aisle, you can see why a retailer like Tesco needs to get its ranges absolutely right and minimise the risk of lost sales,” said John Nevens, co-founder of Bridgethorne.
“Retailers want to see manufacturers offering genuine consumer and shopper insights and evidence of real brand innovation. They are increasingly looking to their suppliers to make informed recommendations on everything from range and distribution to promotion strategy and space optimisation, to show how their recommendations will lead to incremental growth for category and retailer,” he explained.
For example, range reviews are regarded by multiples as a vital tool in their effort to become the retailer of choice for shoppers in an increasingly competitive market.
“Retailers want suppliers to help them ensure their ranges offer the best choice for shoppers while delivering the maximum possible return. They want to understand what new products shoppers want, and in so doing, to optimise their return from the space they have available."
@ 2015 ESM - European Supermarket Magazine
