Navigating the fast-moving consumer goods (FMCG) landscape has become difficult. It’s not just the consumer path-to-purchase that’s grown in complexity. The playing field for manufacturers and retailers has evolved as well. Notably, for the first time since 2009, the total number of brick-and-mortar stores in the U.S. has declined. As we’ll review a little later, this hasn’t affected all channels to the same extent, but it does highlight the importance of handling product assortment and distribution with utmost efficiency.
As more consumers look to online opportunities, having seamless integration with digital offerings becomes vital for traditional FMCG businesses. It’s pivotal to efficiently manage distribution between online and offline platforms for optimal gain, especially as we see contraction in the number of physical stores. When it comes to capitalizing in-store, retailers should constantly evaluate their portfolios with an eye for what will drive future growth, and then expand carefully with innovation and divest purposefully where it’s needed.
Ineffectively adding SKUs can result in category volume loss
In today’s retail environment, we’re seeing entire aisles of the store posting flat or negative performance. But this doesn’t necessarily mean there’s a lack of opportunity. In many cases, stagnant categories can be surprisingly expandable. For example, declines in demand don’t always require that retailers remove a product or category altogether. That's because even in situations where declines exist, retailers and manufacturers need to collaborate in delivering the optimal assortment to meet shifting consumer demand.