Knowledge Bank Blog, Range & Portfolio

The Ranging Sweet Spot

There has been a lot of talk in the industry recently about “less is more” ranging, what with Tesco’s Reset activity, followed by Asda’s current activity.  But the challenge of finding the perfect range has always been key to Retailers, and to Suppliers advising them on their categories. How do you find the sweet spot where the Category range is small enough to make it easy to find and choose, but big enough to offer something good for everyone?  It isn’t easy and the answer will vary by Retailer and format, but here are three principles that will help.

First, take a common-sense approach to thinking about consumer need and occasion.  Know why your category is bought – the needs (e.g. health, treat, portability) and occasions (e.g. quick lunch at home or weekday evening meal).  Make sure you have something good for each need and occasion where the Category plays.  Additionally, think about needs and occasions where the Category doesn’t play but where you are trying to stretch it (e.g. breakfast biscuits, or low alcohol beer), and make sure you have something good here too.    Don’t over complicate it – you don’t need multiple options for exactly the same need or occasion.

Second, think about price and premium.  You will have shoppers who are highly price aware and sensitive.  You need products at price points to keep them in your category and store.  But you also want to offer premium products – something better at a higher price, with a higher margin, for those customers who want it and can afford it.  Think about price point and premium across each need and occasion, and make sure you can tick all the boxes.  Again, don’t over complicate it.

Thirdly, check competitors.  Competitors should not define your ranging, but they are a great way to sense check it.  Look at every SKU which they stock but you don’t, and ask a simple question.  Is the need, occasion or price point that this meets, met as well or better by something in your range?  If the answer is “yes”, then don’t worry.  If it is a clear “no” then steal or imitate with pride.  If it is “marginal”, resist adding to your range, on the grounds of simplicity for the shopper.

Through all this you will require the discipline and bravery to make some common sense calls on what is good enough.  The temptation to cover every possible angle can lead you back to range overload.  The wrong approach is to allow an extra line in “just to be sure”.

I haven’t talked about the role of data analytics above.  Those Retailers who can track individual purchase behaviour over time, periodically talk excitedly about how this data aids ranging decisions.  The theory is compelling.  The fact though that some of these Retailers seem to blow hot and cold on this issue, makes me advise caution.  If you can get the data, then do so.  But before investing heavily in it, ask for specific examples of the data being used in other categories, and the resulting sales effects.

So think about need, occasion, price point and premium, check the competition and be brave enough not to “double up” with extra products just in case.  That’s the way to finding the sweet spot, and a winning range in store.

Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG companies.  He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.