Are your #3 or #4 brands (or worse) at risk of delisting?

  • The days of national brands that are not in the top one or two brands in their respective category may truly be limited.

    An Advertising Age article is reporting that Wal-mart in the US has decided to keep Ziploc brand lunch bags and its expanded Great Value control label line-up while eliminating well known but less popular brands such as Glad and Hefty from their category assortment.

    This is being done in the name of SKU rationalization, which simplifies the supply chain, increases negotiating power with remaining suppliers and squeezes costs out of the business. If done correctly shoppers will continue to purchase from the narrower assortment with no impact to Wal-mart’s category sales.

    http://adage.com/article?article_id=141918

    This should act as a wake up call to suppliers of brands that are smaller, declining or have no clear category role. Unfortunately, there are many brands that fit one or all of these criteria that still find themselves on-shelf today. The suppliers of these brands have a significant risk to their business as they are likely to be pushed off the shelf in the name of efficiency.

    Can anything be done? According to the article, a last minute spending spree on media in order to keep the Glad and Hefty brands alive at retail failed. No amount of last minute spending could save them.

    Here are a few indicators that your brand may be at risk of being rationalized:

    1) Ranked # 3 or worse in the category brand rankings.

    2) Little or no meaningful consumer media spending.

    3) Many overlapping SKUs / Flavors / Varieties with larger / stronger brands

    4) Lack of true innovation – expansion through line extensions.

    5) Control label sales in the category of 25% or greater.

    6) Several customers that account for a disproportionate amount of brand sales.

    If your brand has three or more of the risk indicators listed above your company needs to proactively work to change the situation.

    Once the retailer puts you in their sights for SKU rationalization, there will be nowhere to hide.

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