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By ILAN BRAT, ELLEN BYRON and ANN ZIMMERMAN
Why does Oreo have nearly 50 different versions of its classic cookie? Variations on brands used to be taken for granted but some of the biggest grocery retailers are trimming down in a bid to trim cost.
Retailers are finding that there are too many product choices. This is a challenge for manufacturers, who have grown accustomed to churning out incremental variations on popular products to maintain shelf space and keep their brands fresh in consumers’ minds. For consumers, the shift means less variety but also less trouble sorting their way through a sometimes-bewildering variety of offerings.
Retailers’ drive to simplify is a big shift in the trillion-dollar consumer-products sector. Both retailers and manufacturers long agreed that bigger selections were better, especially when the economy was healthy and consumers were spreading their grocery-shopping trips around two or three stores.
Now retailers are cleaning up the clutter. They are trying to cater to budget-conscious shoppers who want to simplify shopping trips and stick to familiar products. Retailers have found that eliminating certain products can lift sales and profits, in part by cutting excess inventory and making more room for house brands.
“All that go-go 1990s where we were adding items in and adding items in, and people wanted more, more, more, more choice… just didn’t pay off,” said Catherine Lindner, Walgreen’s divisional vice president for marketing development, at a recent conference. Looking at store shelves, “People say, ‘Whoa, you’re bombarding me. Help me figure out what I need.’”
Big retailers also have grown more adept at creating profitable private-label brands, giving them another incentive to remove competing name-brand products.
For these reasons many manufacturers have gone “rogue”, sidestepping traditional retail channels and are using social media networking, social network marketing and social influence marketing to create a demand for their product lines.
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David Schwartz
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