Nielsen sees a similar trend emerging in key categories such as shampoo and chocolate confectionary.
Some 70% of stock-keeping units (SKU) in the ready-to-drink tea category accounted for less than 2% of the overall category sales last year, Nielsen has reported.
The same was observed in other key categories such as shampoo (65% made up just 2% of sales), chocolate confectionary (64%), sanitary protection (56%) and sauces (47%).
“Over the years, there has been a proliferation of brands, products and SKUs in the marketplace as manufacturers compete to satiate consumers’ appetite for new variations, products and experiences. Finding and maintaining an optimal assortment has always been a challenge,” Didem Sekerel Erdogan, Senior Vice President and Analytics Leader, APAC and Eastern Europe, Middle East and Africa, NielsenIQ said.
“But more is not more, but rather the opposite as manufacturers end up investing in production and in-store shelf space for products that do not drive any incremental value, thereby eating into their profit margins.”
Nielsen said changing consumer behaviour should drive manufacturers to reassess their assortment.
It noted that consumers are now streamlining their budgets and have become discerning in the way they purchase products. Consumers also now have more choices as new retailers entered the Hong Kong marketplace.
“By correctly identifying which SKUs to retire and keep, not only can manufacturers focus production and supply chain efforts on incremental brands and SKUs, but they can also eliminate waste, increase profitability and reinvest profits into new product development, which will ultimately capture new shoppers,” Dickson Chan, Head of Analytics, NielsenIQ Hong Kong and Taiwan said.
He cited for one, a recent simulation that saw a 25% sales value increase in the ice-cream category achieved just by rearranging SKUs.
