Localizing product assortments has come full circle in the grocery and hardlines sectors. Following decades of mass retailing and a focus on efficiency, an ever-diversifying consumer base and growing Millennial demands for personalization have brought a return to localized assortments.
In a hypercompetitive market with significant pressure on margins, the promise of localization is increased basket size and loyalty thanks to customized, compelling product assortments. If you lose your consumer to another store that better caters to their needs, they may not come back. But the more cities and the more demographics you serve, the more complex your supply chain becomes. If you consider the extremes, retailers could have a unique assortment for every store, driving ever-expanding store and DC shelves, but only one national circular to reach consumers.
Grocery and hardlines retailers can’t win with a general store model and outdated assortment practices and resources. They need lean, flexible supply chains that enable leaders to recast assortments and get important products that drive consumer excitement on the shelf. The successful retailer needs to quickly get smart about localization to protect share. A compelling offering is quickly becoming table stakes.
BALANCING OPPORTUNITY AND COMPLEXITY
Kurt Salmon partners with grocery and hardlines retailers to fundamentally improve the way they build assortments. Our holistic approach to localization helps retailers make smarter business decisions, then navigate the complexity to make them a reality.
- Business intelligence. We help grocery and hardlines retailers make better assortment decisions through improved analytics that inform smarter category strategies. We first help you define your customer base, and through our analysis we can reveal your distinct customer segments and needs.
- Tools/Processes. To meet those needs, Kurt Salmon works with grocery and hardlines retailers to establish and implement the tools and infrastructure needed to organize information and manage decisions at the local level. Traditional tools and processes cannot handle the combination of unique stores and an expanded SKU base—it’s simply too much.
- Local flavor. Store register and sales data can reveal only so much. Store associates have a wealth of knowledge about product gaps and needs based on their everyday interactions with customers. Kurt Salmon works with clients to uncover these otherwise hidden local insights and funnel them to the right decision makers.
- Organizational structure. Armed with the right information and tools, grocery and hardlines retailers can reinvent localization strategies that truly work. But execution is another matter. Kurt Salmon goes beyond the numbers to help retailers identify and enact the necessary changes to organizational structure—from merchandising and planning to supply chain to field.
Taken together, these key enablers enhance the value realized from localization activities – from coordinating promotional features and timing with local events to developing “specialty” private brands tailored to local tastes. At a certain point, however, the complexity and costs of incremental localization efforts begin to outweigh their benefits. Kurt Salmon helps grocery and hardlines retailers to harness the right key enablers to push the point of diminishing returns from localization activities further out, driving more effective local strategies and producing greater returns.
MORE THAN A MATH PROBLEM
While optimized localization can have a positive bottom-line impact, it’s critical for your advisor to see localization beyond the numbers. Grocery and hardlines retailers can’t simply look at the analytics and think that it’s only a math problem. Assortment optimization is a numbers problem, a field communications problem, an infrastructure problem, a supply chain problem…an organizational problem. Kurt Salmon works with clients to gather and understand the numbers, then develops a holistic approach that is operational, not transactional, to help retailers execute meaningful and profitable change.
CASE IN POINT: SUCCESSFUL LOCALIZATION BOOSTS SALES
A major global grocer/mass retailer wanted to implement tools to manage the complexity of a highly differentiated assortment. Kurt Salmon used that need as a springboard to create a holistic and customized localization solution. The new data-informed assortment included new, edited and innovative cluster-specific items, which led to a 4% to 7% sales increase in pilot categories.