Delist, Relist: winning the right volume with the right pack mix
The Grocer is reporting incredible news. Delisted brands have been put back in place. In the beer category Tesco tried to focus on craft beers, but has returned to the old assembly line of products, why?
Understanding whether a product should be delisted is not only a cause for concern for retailers, but manufacturers can win in profitability by knowing their strengths and cutting their weaknesses.
When should you delist?
1. First know how your brands interact. Manufacturers need to avoid creating cannibalisation that switches from a profitable pack to bolstering a struggling one.
2. Know the year on year growth or decrease in your pack performance.
3. Compare price per litre/kg. Scenario plan for delisting the pack and check whether your revenue is redeployed to higher value pack to upgrade the shopper.
4. Check your competitive set and know the customers alternatives. Switching analysis can indicate how much currently lose to competition or your other packs to weigh up benefits of a delist.
5. Understand the consumer segmentation side of optimising assortment. What your brands/ packs target by consumer type, i.e. old v. young/ urban, affluent, out of home vs. at home
6. Analyse the success of promotions and price on the pack. Understanding if you are creating positive incremental volume, erosive incremental volume, or subsidising your base with events is imperative to having the fundamentals to cut a pack.
By tackling delisting in a comprehensive way manufacturers may find that the focus on craft beers brought a higher value per litre, but a much lower volume to drive profits for the category.
Accuris offers services to quantify your pack performance for promotions, pricing and revenue growth management. Using pricing, assortment and elasticity you can make decisions based on quantitative fact based approaches and simulate outcomes of potential changes to your portfolio.
Delisting products should be focussed on revenue growth management, achieving category value and redeploying customers from poor performing packs to more successful ones.
Not broadening offers to fad impulses that don't sustain profitability for both manufacturer and retailer.