Reducing Assortments without Losing Business: Key Lessons for Retailers and Manufacturers

To gain efficiencies in the supply chain, retailers regularly consider which items of products or brands they can delist. However, increased efficiency is not granted when products are dropped. Choosing the “wrong” products or brands may result in reduced customer satisfaction, lost category sales, or increased store switching behavior. The detergent assortment reduction at a Dutch retailer showed that sales losses can only be observed in the short run and that the reduced assortment is more attractive, especially to new buyers in the category. A survey across multiple categories revealed that negative effects of delisting are less risky for weaker brands and utilitarian products. Retailers are welladvised to be cautious with dropping strong, hedonic brands and use a set of criteria to make the best delisting decisions. Manufacturers should apply approaches depending on the strengths of their brands when confronted with an impending delisting