In India, a steep 77% of SKUs in the carbonated soft drinks category contribute to less than 2% of overall category sales – pointing to the glut in non-performing products and variants that exist within just this one category alone, Nielsen said.
The report said as the pandemic increases pressure on supply chains, assortment optimisation has never been more important, adding that the majority of stock keeping units (SKUs) across key categories contribute to less than 2% of overall category sales.
“Over the years, there has been a proliferation of brands, products and SKUs in the marketplace. Finding and maintaining an optimal assortment has always been a challenge. The Covid-19 pandemic as well as intensifying competition have elevated this test to a new level,” NielsenIQ senior VP Didem Sekerel Erdogan said in a statement.
“Manufacturers end up investing in production and in-store shelf space for products that do not drive any incremental value, eating into their profit margins and increasing the likelihood of out of stocks,” Erdogan added.
Shampoo, toilet soaps and biscuits show similar trends, and this becomes even more prominent as FMCG manufacturers struggle to manage their supply chains to prevent stock-outs, and as they determine which products to prioritise, the report said.
The report said across the globe, there are structural challenges with assortment across most FMCG categories, adding that across world markets, beverages, instant noodles, chocolate, and detergent are some of the most underperforming categories in the top 15 markets.
Changes in consumer behaviour brought about by the pandemic require manufacturers to reassess their assortment, with newly constrained and cautious consumers streamlining their budgets and becoming more discerning about consumption. Besides, shoppers are increasingly favouring smaller store formats, and this reinforces the need to make the best possible use of limited space. “For the past three years in India we have observed shoppers moving away from large format modern trade stores towards more traditional trade outlets,” the report said.