Consumers may find some of their favorite products missing from supermarket shelves as manufacturers were advised to streamline their offerings to maximize shelf space.
In its latest study, NielsenIQ found that a number of Fast Moving Consumer Goods (FMCG) have been underperforming in many emerging and developing markets.
This highlighted the need for manufacturers to streamline their products to better maximize limited shelf space in supermarkets. NielsenIQ said retailers are already reducing their assortment on the shelf without compromising category sales.
“This involves choosing products that are not just fast selling, but also those that are niche but incremental to the category,” NielsenIQ Philippines Analytics Leader Lou-Ann Navalta said in an e-mail to the BusinessMirror.
“If the assortment is optimized this way, we do not turn off shoppers because they will always find a product in the assortment to fulfill their needs,” she added.
Navalta said if manufacturers were to streamline their products, this would remain a win for shoppers, manufacturers and retailers.
She said that while removing some products on the shelves that are “underperforming,” retailers and manufacturers can play it smart and still provide choices to consumers.
Navalta also said retailers and manufacturers can weed out not just low-selling products but also those that are easily replaceable.
This streamlining is necessary given the study findings, which showed 75 percent of stock keeping units (SKUs) contributed less than 2 percent of category sales.
In Philippine supermarkets, some 79 percent of SKUs in the instant noodles and wine and spirits categories contributed to less than 2 percent of category sales.
Beverage, instant noodles, chocolate, and detergent are some of the most underperforming categories in the region’s top 15 markets, including the Philippines.
NielsenIQ said this pointed to the glut in non-performing products that exist within just this one category alone.
“More is not more, but rather the opposite as manufacturers end up investing in production and in-store shelf space for products that do not drive any incremental value, thereby eating into their profit margins,” NielsenIQ Senior Vice President and Analytics Leader Asia Pacific and Eastern Europe, Middle East and Africa (APAC & EEMEA) Didem Sekerel Erdogan said.
The pandemic, NielsenIQ said, has made cash-strapped consumers more discerning in their purchases, careful to keep within their budgets.
NielsenIQ also said consumers are also now favoring smaller store formats such as community supermarkets, convenience stores, and mini-marts that are near their homes.
This, NielsenIQ said, reinforces the need to make the best use of limited space in their locations.
Further, due to e-commerce, consumers spend less time browsing shelves than before the pandemic.
“Financially impacted consumers have less money to spend, less time to shop and will therefore be more deliberate in their spending. The challenge for manufacturers and retailers is to ensure that the products on their shelves cater to consumers at all ends of the economic spectrum, while also remaining cost-efficient and eliminating wastage,” Navalta said.
Apart from the Philippines, the study also focused on Russia, Singapore, Thailand, India, Indonesia, Turkey, UAE, Saudi Arabia, Greece, Malaysia, Australia, Hong Kong, China and Vietnam.
The study aimed to provide NielsenIQ clients a forward-looking view into consumer behavior in order to optimize performance across all retail platforms.
Image credits: Nonoy Lacza