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A Tail of Two Retail Channels: Getting the Assortment Mix Right
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A Tail of Two Retail Channels: Getting the Assortment Mix Right

Whether we’re pampering ourselves or our pets, we’re making a special trip to the store to do it, and that’s a big opportunity for retailers.

The personal care and pet care departments are often considered “destination categories,” meaning they’re departments that can directly influence where consumers choose to shop. For example, if a consumer thinks, “I need to buy food for Fido, so I’m going to go to Store X to buy it,” then all stores will want to be a part of that choice set.

This then begs the question: Can all stores offer the same product categories or departments as destinations? The answer is, no. In fact, we know that some categories serve a destination role at some retailers, while other categories serve that role for others. But it’s not enough to simply know which departments drive sales in which types of stores. That’s because a retailer’s performance in a destination category also depends on having the right products and brands in stock.

The key for retailers? Maximize your opportunity with effective assortment strategies and tactics that foster incremental sales and drive growth. Let’s look at a couple of examples.

Up Close and Personal with Drug Retailers

When consumers run out of their favorite shampoo, they’re likely to head to the nearest drug store to replace it. This consumer tendency makes personal care a destination category for drug retailers. While offering a greater variety of personal care and health care items will grow total store sales in the drug channel, other retailers should tread lightly when it comes to additional assortment in this or other personal care categories/departments. In fact, adding too much variety within these two categories in food and mass stores can actually have a negative effect on total store sales. That’s because they’re already saturated in those channels—there’s too much variety in these categories already, which is stealing from other categories with more sales potential. So while sales in the category may increase, the uptick will likely cannibalize sales from other categories in the store. In short, the personal care opportunities and roles vary greatly by channel/type of store.

Incremental Sales Effect: Personal and Health Care

Mass Channel is a Teacher’s Pet

Unlike personal care, pet care offers a sizable opportunity for mass merchandise retailers, totaling 3% of the channel’s sales, but making up only 2% of merchandise in store. The size of the category is smaller than its contribution to overall store sales. So, mass merchandise retailers and manufacturers would do well to consider strategically expanding their pet care product selections. It’s important to note, however, that increasing the variety of pet care items will only drive sales in mass retail stores. Drug and food retailers won’t be able to replicate similar success, as pet care is overrepresented in those channels.

Incremental Sales Effect: Pet Care

In the personal care, health care and pet care categories, retailers should base decisions to increase or decrease the variety of items on the type of retail store where the products are located.

Methodology

The insights in this article were derived from Nielsen Scantrack data for the 52 weeks ended 12/28/13.

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