Overview of Aussie Supermarket range reviews

Range reviews are a structured process used by the Grocery Industry to assess and decide which products will be retained, added, or deleted from the range. These reviews occur for each product category and are an essential way for supermarkets to optimise their range, meet customer demand, respond to trends and also improve profitability. Here’s our overview of how range reviews typically work with Australian retailers:

1. Planning and Timing

• Scheduled Reviews: Range reviews are usually conducted on a rolling schedule, with each product category reviewed at set times of the year.

• Review Triggers: Occasionally, an out-of-cycle range review may occur due to a specific trigger, such as the introduction of new competitors, changes in consumer trends, or underperformance in a category.

2. Data Collection and Analysis

• Sales and Market Data: Supermarkets analyse extensive sales data, including volume, revenue, and profit margins for each SKU (Stock Keeping Unit) in the category. They also examine consumer behaviour data, such as purchase frequency and loyalty program insights, to understand preferences.

• Market Trends and Consumer Insights: Analysis extends beyond sales data, including current consumer trends (like demand for organic, vegan, or eco-friendly products), market reports, and external insights on the category. For example, if there’s a rising demand for plant-based foods, supermarkets may expand their selection in this area.

• Competitor Analysis: Reviewing competitor offerings, especially if one chain is known for excelling in a category, can influence decisions. Retailers will often drive ranging decisions with competitor analysis, such as pricing competitiveness, gaps in performing range in other retailers, or launching innovation ahead of competitors.

3. Supplier Submissions and Negotiations

• Submission Process: Suppliers often have the opportunity to submit proposals during range reviews, showcasing their product’s value and suitability for inclusion. They may present data on product performance, consumer feedback, and insights into how their product aligns with consumer trends.

• Pitch Meetings and Negotiations: Supermarkets may hold meetings with suppliers to discuss product performance, negotiate terms, and explore potential promotions or support for new products.

• Category Captain Role: A Category Captain is a Supplier who advises the Retailer on trends, insights and recommendations for a category. Categories often have ‘Category Captains’ to support in driving the strategy and insights for the retailer.

4. Decision-Making: Product Selection and Optimisation

• SKU Rationalisation: Based on the analysis, supermarkets decide which products to keep, add, or delist. Underperforming products are removed (the ‘tail’ of the category), while high-demand or on-trend products may be added or more on shelf facings given. The goal is to strike a balance between core items, unique offerings, and popular private-label products.

• Private Label vs. Branded Products: All retailers tend to stock a mix of both Branded, and Private Label products based on consumer needs. Both ranges offer the consumer a point of difference and choice, driven by decision on price, innovation/uniqueness, and marketing.

• Space Allocation: Supermarkets decide on the amount of shelf space each product will receive based on expected demand, profit margins, and promotional support. High-performing items or products with strong promotional backing tend to have more space and strong shelf placement, in order to keep up with the consumer demand.

5. Implementation and Ongoing Monitoring

• Planograms: After decisions are finalised, stores undergo a planogram implementation to rearrange shelf space, update layouts, and introduce new products or promotions. Stores can use new signage or displays to draw attention to changes.

• Monitoring and Performance Review: After implementation, supermarkets continuously monitor product performance and consumer response. They use this data to evaluate whether the changes were effective and to prepare for the next range review.

6. Challenges and Supplier Impacts

• Intense Competition for Shelf Space: Shelf space in large chains is limited, and there are products presented from around the world which makes it a very competitive environment.

• Promotional and Financial Commitments: When launching a product, it is important to outline the commercial plan including promotions, margins and any commercial commitments that are planned. Having a robust promotional and financial commitment with the retailers that you deliver on helps set any new product launch up for success.

• Data and Technology Requirements: It is important that Suppliers invest in data analytics to provide insights on trends and consumer behaviour that align with the supermarket’s strategies.

In summary, range reviews are a highly structured, data-driven process where Retailers assess each product category to ensure alignment with consumer demand, profitability, and current market trends. For suppliers, these reviews are critical but challenging.

Australian Grocery Distributors is here to help and will ensure that your brands get the best outcome through the use of strong performance data, alignment with trends, and being able to advise on the appropriate financial expectations to secure or retain shelf space in highly competitive supermarket environments.