Happy 2025!
We start the new year by revisiting some insights on assortment variety, success and presentation
The average Top 10 Brand in Europe offers 14 SKUs
A larger assortment provides more opportunities to meet different shoppers’ needs (sizes, flavours, package formats) and a better chance to get shelf space both of which should ”result” in more penetration (the relationship is certainly not one-directional: being large gives you the resource to expand your offering).
Indeed the number of SKUs that a brand offers is closely linked to its reach among category buyers but the incremental value of an additional SKU declines: Larger brands get much more bang for the buck from each of their SKUs.
Is a large assortment necessary for high reach? Absolutely not – 80 brands get more than 25% relative penetration with 5 or fewer SKUs.
Bigger brands – bigger SKUs
We study to what extent larger brands actually rely on more SKUs in finding success. The figure shows the share of the category assortment owned by brands in different volume share tiers. This analysis is based on more than 13,000 Top 10 brands across 20 countries and 87 categories. For example, all Top 10 brands with less than 5% market share command on average 1.5% of category volume sales, while offering 2.3% of its assortment. In contrast, brands between 55 and 60% market share reach this level with only 32% of the assortment.
SKUs in the largest share tier therefore are substantially more successful: the average SKU of brands with more than 50% market share is almost three times as big as the average SKU of brands with less than 5% share. This pattern is consistent even within the smallest share tier: SKUs of brands with 4-5% share are three times the size of SKUS from brands with less than 1% share. Therefore the strategy to success is more complicated than just increasing assortment size. Big brands benefit more from each individual SKU they offer – potentially because they better meet shoppers’ needs, but certainly also because these SKUs are available in more retailers and therefore easier to choose.
Horizontal beats Vertical
Assortment variety is essential for retailer listings and, as we have shown before, for brand penetration. At the same time, choice overload is frustrating and may decrease consumer satisfaction. Research shows that not only assortment size, but also how products are presented (i.e., horizontal vs. vertical) impacts choice: horizontal displays are easier to process and increase the number of items selected (see figure). Horizontal product displays better match our binocular vision field and correspond to the dominant direction of eye movements. Higher processing efficiency results in higher perceived assortment variety relative to assortments of the same size presented vertically. Retailers should therefore use horizontal displays especially in product categories where consumers seek variety and desire to shop for more than one item (snacks, cereals, or beer).
