Full understanding: how to simplify the assortment and not lose customers

During the pandemic, many retailers realized that they needed to change their business model, as the old one was under threat. But there is a better way - to strengthen the assortment in such a way as to increase marginality and spur growth. How to do it,

During the covid-19 pandemic, low retailer margins, which had already been falling for several years, began to shrink even more rapidly. This was due, among other things, to the development of the hard discounter format, the increasing importance of the value proposition, and the ongoing rise of online trading.

Retailers have realized that they need to rethink their business model as soon as possible. Many of them have been locked in a vicious circle for years:

to increase margins, they expanded the range; to get additional financing from brands, complicate the shopping experience for consumers, increase costs in supply chains and store operations; more promotions were offered to increase traffic, and maintaining margins increasingly depended on brand funding.

But the expected increase in sales and profits never happened. There is a better, more holistic approach to how to strengthen the assortment. We called it customer-led category management or CLCM.

It all starts with the client

The buyer is the owner of his wallet. It is his actions that determine which of the market participants will be the winner and who will be the loser. That is why CLCM starts with the client.

Before thinking about brands and products, a retailer needs to have a deep understanding of their core customers: who they are (in terms of demographics, sentiments, needs), how they shop for different occasions and in each category. This will allow you to develop a clear value proposition.

Consider an example. The retailer struggled with insufficient sales in the savory snacks category, where it seemed to have everything it needed to win. We helped him conduct a detailed customer analysis using a range of quantitative and qualitative methods (customer surveys, face-to-face interviews, in-store shopper behavior research, customer journey mapping). As a result of the analysis, the retailer painted a “living” picture of who goes to his stores and what they really need. Then he broke all customers into segments (generation Z, young families, middle-aged buyers, retirees, low-income), highlighting their individual characteristics and needs. And I realized that buyers from the main segment wanted to see a more diverse and interesting offer in the category with new options,