Drug chains need to regain control of shelf space

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Once upon a time, the basic drug store merchandise mix was a simple affair, a half-dozen major brands in each product category, a handful of popular sizes, a small assortment of line extensions. No longer.

Today’s drug store shelves are crammed with both major and supplementary brands. Indeed, sometimes off-brands dominate. Line extensions sometimes dominate. Sizes proliferate. Often, consumers walk away without making a purchase, confused and confounded by names they’ve never seen before — and, occasionally, never heard of.

The losers here are the retailers. Faced with a choice of taking on new labels they don’t know or possibly being out-merchandized by competitors willing to take a chance, they increasingly find their shelves stocked with brands, sizes and line extensions that are new to them — and often don’t sell.

Predictably, sales suffer. Not only sales of category leaders, but sales in general. Turned off by the proliferation of products they don’t know, customers frequently choose to buy nothing, making do with brands, sizes and combinations they already have at home. Or using less product. Or none at all.

cdr-filler-opinion-750This dilemma defies an easy solution. Or perhaps any solution at all. Too often, retailers make a decision that turns out to be a mistake. Then, regrouping, that becomes a mistake as well.

The bigger issue is that retailers have possibly lost control of their shelf space. So overwhelmed are they with supplier options that, rather than manage their inventories, they simply accede to supplier requests and take on products they had, in different times, turned down. Or, conversely, they turn down products they should, in easier times, have taken on.

This is the age-old battle for shelf space that, in previous times, retailers almost always won, simply by asserting their right to determine which products belong on their shelves. That right has been taken away from them, simply because they are overwhelmed with product options they can no longer ­control.

Simply put, the time has come for retailers — and especially chain drug retailers — to reassert control over their inventories. It has become easier for retailers to approve a new product than for them to say no. In doing so, they have compromised their in-store inventories and ceded control of their store to suppliers who have nothing to lose by insisting, often with adequate data support, that their products belong on retailer shelves.

All the old safeguards have evaporated. Retailers no longer test products before adopting them chainwide. They no longer turn down requests for space as routinely as they once did. They no longer extract demands from suppliers in return for accepting a new, and sometimes untested, product. They no longer monitor their shelves as they once did.

This is not a diatribe against suppliers, who are merely doing their job in requesting space for new items. Indeed, new products remain the lifeblood of the retail business. But checks and balances are what have always made retailing work. Today, much of that system is no longer practiced, with the result that sales have suffered. All sales.

Combine this with the fact that the merchandise mix among all retailers is increasingly assuming a commonality that also confuses the shopper, and a more cautious shopper is the logical result.

So, again, the time has come for retailers to begin reasserting control over in-store product inventories, with an eye toward more-manageable product assortments and perhaps a higher bar to supplier access to retail shelves.

Put another way, retail shelf space is too valuable a commodity to cede to suppliers without some forethought. Doing so compromises the entire store, while elevating the competition and hurting the customer.



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