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Less is more

Less is more

Are the days of SKU proliferation finally over?


Scott Megginson
President, Insights Division, Canada
Kantar
Scott.Megginson@kantar.com

I spent a significant part of my mid-career life in CPG and always had trouble understanding the addiction the sector had to line extensions. Sure, there was the age-old argument that small innovations and limited-time offerings were ways to engage retail buyers and secure shelf space, but in the end launches like an antifreeze-blue cola and cappuccino flavoured gum failed the ultimate consumer test.

We have seen massive consumer and retail changes in 2020, and now more than ever it is time to reconsider these tactics as shoppers go back to basics and browsing moves more to a browser. I wrote the following article early in the pandemic, and it serves as a reminder that shoppers are not as loyal as we think, and it’s better to offer more of what they need than to dilute brands and shelf sets with noise.

Whether you’re a believer in brand loyalty or brand polygamy, consumption data show time and time again that most shoppers have repertoires of interchangeable brands in both their consideration sets and baskets. However, it is also common to see a preference for certain brands over others when the playing field is level.

Some would say that any brand leaning is due to favourable mental and/or physical availability, while others would say that it’s a survival habit to help shoppers navigate the current SKU proliferation on the shelves of our stores. For instance, Barry Schwartz asserted in The Paradox of Choice that eliminating consumer choices can greatly reduce anxiety for shoppers.

Now, assuming shoppers go into a store with a preferred brand in mind, what could stop them?

They could be seduced by competitive promotions, which have trained shoppers to stock up on the cheapest brand available without bias. Perhaps they could be confused by an ill-conceived, but all too common, package graphics change that makes it hard to locate their preferred brand in the second or two they spend scanning the shelf. A third barrier is a “forced” trial, in which a shopper is compelled to buy another brand when their preferred one is not available. In the Harvard Business Review article “Stock-Outs Cause Walkouts,” Daniel Corsten and Thomas Gruen showed that over a quarter of shoppers will simply buy another brand if theirs is out of stock on the shelf in the best of times.

What does this mean for brands now that COVID-19 has disrupted our shopping habits more than we could ever have possibly imagined?

Forced trial at retail

Stephanie Burger of Kantar Profiles asked these questions in both the US and Canada in April and found some interesting points of reconsideration happening across different categories that had been flying off the shelves at the time:

  • A third (34 percent) of Canadians had been forced to try different brands of toilet paper, and over half (54 percent) of these new triers claimed they may consider purchasing them when the crisis is over.
  • Pasta saw a similar percentage of forced trialists (32 percent), with three quarters (75 percent) claiming they may consider buying the new brand again.
  • Diapers are often considered to be a fiercely loyal category, but almost 4 in 10 (39 percent) have had to try another brand and over half (54 percent) say they may consider buying the new brand again.
  • Meanwhile, peanut butter has experienced the smallest degree of forced trial (19 percent) so far. However, two thirds (67 percent) of consumers liked the new brand enough to say they will consider the brand after COVID-19.

Our English-speaking respondents in Canada were generally more likely to consider adopting the new brands than those in our French panel, while Canadians were more likely than Americans overall to switch over to new brands (with the exception of diapers).

This was a quick non-scientific survey (over 1000 respondents per category in the panel), but it sheds some directional light on how short-term disruptions to shopping can potentially result in long-term changes to brand preference.

Now What?

If brands want to insulate themselves against wandering eyes at the shelves, two potential tactics are:

  • Increasing / maintaining salience through advertising. Now is not the time to go dark and abandon the positive associations and top-of-mind availability your brand has invested so much into building. Recent Kantar research suggests that COVID-19 has not changed consumer attitudes to advertising. However, brands shouldn’t be tone-deaf to the sensitivities of the current situation.

  • Increase the availability of core SKUs by decreasing space for others. Days of supply rules fly out the window when panicked shoppers are lining up six feet apart to stock up for a week or two. Some manufacturers were quick to reduce production to the smaller percent of SKUs that represent most of their unduplicated usage. With good category management and retailer cooperation, existing shelf space can be shifted to the hero SKUs in the brand set for the time being. That would reduce brand switching and/or retail defection. Obviously, incremental display would help, but that is often booked well in advance, and all categories are competing for the space.

Scott Megginson is the President of Kantar Canada, was Director of Consumer Insights and Category Management at Pepsi-QTG Canada, and is the one who loads the grocery cart for his household.