A TAIL OF TWO RETAIL CHANNELS: GETTING
THE ASSORTMENT MIX RIGHT
CONSUMER| 02-09-2015
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Whether we’re pampering ourselves or our pets, we’re making a special trip to the store to do it, and
that’s a big opportunity for retailers.
The personal care and pet care departments are often considered “destination categories,” meaning
they’re departments that can directly influence where consumers choose to shop. For example, if a
consumer thinks, “I need to buy food for Fido, so I’m going to go to Store X to buy it,” then all stores
will want to be a part of that choice set.
This then begs the question: Can all stores offer the same product categories or departments as
destinations? The answer is, no. In fact, we know that some categories serve a destination role at
some retailers, while other categories serve that role for others. But it’s not enough to simply know
which departments drive sales in which types of stores. That’s because a retailer’s performance in a
destination category also depends on having the right products and brands in stock.
The key for retailers? Maximize your opportunity with effective assortment strategies and tactics that
foster incremental sales and drive growth. Let’s look at a couple of examples.
UP CLOSE AND PERSONAL WITH DRUG RETAILERS
When consumers run out of their favorite shampoo, they’re likely to head to the nearest drug store to
replace it. This consumer tendency makes personal care a destination category for drug retailers.
While offering a greater variety of personal care and health care items will grow total store sales in
the drug channel, other retailers should tread lightly when it comes to additional assortment in this or
other personal care categories/departments. In fact, adding too much variety within these two
categories in food and mass stores can actually have a negative effect on total store sales. That’s
because they’re already saturated in those channels—there’s too much variety in these categories
already, which is stealing from other categories with more sales potential. So while sales in the
category may increase, the uptick will likely cannibalize sales from other categories in the store. In
short, the personal care opportunities and roles vary greatly by channel/type of store.
INCREMENTAL SALES EFFECT: PERSONAL AND HEALTH CARE
MASS CHANNEL IS A TEACHER’S PET
Unlike personal care, pet care offers a sizable opportunity for mass merchandise retailers, totaling
3% of the channel’s sales, but making up only 2% of merchandise in store. The size of the category
is smaller than its contribution to overall store sales. So, mass merchandise retailers and
manufacturers would do well to consider strategically expanding their pet care product selections.
It’s important to note, however, that increasing the variety of pet care items will only drive sales in
mass retail stores. Drug and food retailers won’t be able to replicate similar success, as pet care is
overrepresented in those channels.
INCREMENTAL SALES EFFECT: PET CARE