P&G streamlined its offerings during the early days of the pandemic in order to strengthen its supply chain, and most retailers are still welcoming this SKU rationalization, Neil Saunders, GlobalData managing director of retail told CGT, thanks to the efficiency it’s creating in all areas of the business.
He noted, however, that big brands trimming their lines is indeed creating space for retailers to do more with their private-label brands, as well as with smaller, innovative suppliers.
“There is, arguably, too much choice across most areas of retail, and this can be confusing for consumers,” said Saunders. “While no retailer wants to be in a position where choice is severely limited, they do want to present a comprehendible and relevant assortment.”
Moeller acknowledged differing dynamics depending upon the market, but said the company’s supply chain is positioning it well to serve its retail partners.
“It's early days. We're still working through, as are [retailers], the demand and supply dynamics,” Moeller said. “But I really think our position has been strengthened as a result of the experience and the response that we've all been working on.”
Indeed, while retailers have had to manage inventory issues throughout 2020, including out-of-stocks for much of the year in some categories, very little was caused by SKU rationalization, Saunders said.
“It can, unless planned over a period of time, leave small gaps on retail shelves while retailers work out what to replace the discontinued lines with,” he noted. “This is also a big period of disruption in terms of consumer buying behavior, so assessing the true impact of rationalization may not be possible until we go back to a period of normality.”