How to approach Range Review

If you're an account manager in UK and a Range Reset is approaching

If you are to do a major range reset, some points to consider are the following (these are not steps):

1.       Identify the needstates of the category. If there’s a CDH available then that’s ideal. If not, create sub categories based on functional differences and format differences. Then within each needstate rank the SKUs (both yours and competitors of course) by Value rate of sale i.e total sales value per week divided by number of stores it is listed in. The SKUs at the bottom of the needstate are the ones that can be chopped off as that would save space while ensuring the sales switch over to existing SKUs in the range.

2.       Two metrics that are really handy to look at are

a. performance of the needstate (vs some prior period) and comparison of this growth % with competitor

retailers. This would indicate whether the retailer is growing share in the needstate or not

b. Overtrade/undertrade in a needstate vs the category i.e how big is the needstate in size as a % in your retailer

vs competitor retailers. This helps identify areas that have relatively more headroom for growth which the

retailer could potentially allocate more space to.

As an example, in the above table, your retailer appears to be lagging somewhat when it comes to performance in the Body Washes needstate. The other needstates are also either slightly above or slightly behind but this is the needstate which is the major concern.

On the other hand, when it comes to over/under trade, a clearly noticeably anomaly are hand gels. As a % of total category, they appear to have just 20% share of your category whereas they are a good 30% for the market. This represents an opportunity to go after.

Underperformance & overtrade (& their opposites) could be due to a whole range of factors but the biggest mover of the needle is distribution so its worthwhile checking if there’s any room for improvement there.

3.       Compare Value Rate Of Sale (ROS-sale per week per distribution point) of different SKUs with their respective distributions. Ideally, high VROS SKUs should have high distribution and as you go down the ranking both should decrease. Correct anomalies i.e low ROS SKUs with higher distribution and vice versa.

4.       ROS may be low at present due to the wrong promotion or pricing strategy. Alternately, it might be that’s its only high due to an aggressive promotion or pricing strategy that’s actually unsustainable in future. You would have to look at expected VROS in line with the prospective promo strategy.

5.       Trade up to bigger pack sizes or to products which are functionally superior & hence more expensive is a massive opportunity. Another lens to look through is that of your “mix” or the % composition of your portfolio. All mature organizations look to drive the mix towards higher price point category, brands and SKUs.  In the context of ranging, you could do this by swapping distribution between penetration packs & trade up ones. But the balance between going after this and between driving penetration SKUs is difficult one. Theoretically, you could identify all the penetration SKUs and if they have higher distribution than potential trade up packs, you could swap their distributions and probably end up gaining value sure shot. But a big downside could be loss of penetration so you will have to balance penetration and value gains. Perhaps you decide to swap the trade up pack with a mid-tiered SKU (rather than the cheapest penetration pack) initially and see how the shoppers respond. If you are just looking to maintain current shopper numbers because trade up provides sufficient incremental value for you to meet your objectives. Perhaps you decide to move swap the distributions in peace meals, a little in every range review to be able to gauge shopper switching. I leave this difficult question to you simply because it is very context dependent but you must exploit the trade up potential which is so critical especially in flat line developed markets.

6.       If the NPD is not from a market leader of the needstate, it really only makes sense if it is functionally different to all that’s already there in the category. There’s no space for me too offerings in a range rationalization world.

 By leveraging data-driven insights, you can optimize your portfolio for both penetration and premiumization. Ultimately, the key is to ensure that you give every SKU in the range a distinct role in the category value while aligning with your retailer’s broader strategic goals.