Win During Inflation: Be Laser-Sharp and Rationalise Assortment
Discretionary spending by consumers is going down with inflation. This is making retailers exit irrelevant items/ products. Leading retailers like Walmart and Target are exiting items. Here is an interview by CNBC with Kohl’s CEO Michelle Gass. With our industry exposure and global connections, what we see as a trend is brands and retailers are working to rationalise assortment and resources. They are planning to exit items which are not important to consumers. This means shrinking of assortment width. The key word is “relevance”.
Rationalise assortment and stay relevant is the war cry now.
We covered in our earlier article, on how consumers are not accepting the price increases by brands. Brands, Manufacturers and Retailers all need to focus on consumer closely to minimise the damage.
When the water level is low, you see stones. This is true from inventory perspective. The system buffers are coming down and it starts to show up all unwanted items. I wrote a LinkedIn blog on this few years back. I am sharing the same here as it is still relevant.
Unique Opportunity To Rationalise Assortment
It will be prudent to understand consumer demand as sharp as possible. While this was difficult few years back, with the availability of big data, Demand Sensing® at internet scale, understand consumer demand at scale is possible now.
Whether you are a manufacturer to a brand or retailer, or you are a brand or retailer, it is imperative to understand demand patterns not supply patterns. As retailers want to be sharp and reduce items/SKU’s, they are going to be choosier than ever before. Sunsetting items is more important now than ever. The entire value chain needs to resonate with the consumer demand and play in synchrony. Those who are out of sync with this will miss the limited opportunity that exists during the constrained buying times.
We see manufacturers and brands who want to be ahead of the game are already working with demand driven solutions. Also they are proactive with their customers in suggesting / recommending rather than waiting for the retailers to share inputs.
Another important aspect during these times, is to optimise pricing. Pricing becomes strategic both pre launch and during the season. Brands and retailers need to rationalise assortment with price as a key attribute. Recently Gartner issued a vendor guide for Market Guide for Retail Unified Price, Promotion, and Markdown Optimization Applications — Short Life Cycle (Gartner login required to access). Stylumia is spotted as one of the solutions providing demand-driven price optimisation opportunity for brands and retailers.
What we also see is very few manufacturers are taking this opportunity to think for the consumer and serve the brands and retailers. This is huge market differentiation opportunity for manufacturers.
If you would like to stay relevant and rationalise assortment and maximise revenue and profit opportunities, please do reach out to us for a free discovery and demo session by applying here.