Foodservice assortment rationalization: is it really necessary to remove the lowest-selling items?
The product range review is approaching. The items are listed by volume, the bestsellers stand out, and several products appear at the bottom of the table. To simplify the assortment, the temptation is strong to start by removing those that contribute the least to sales.
For a Foodservice Category Manager, however, this decision warrants a more nuanced analysis. A product with modest national appeal may achieve good results in certain warehouses, meet the needs of a specific customer segment, or complement a strategic offering.
Is this product truly underperforming, or is its contribution being misjudged? Before deciding its future, sell-out data helps to understand where it is being sold, to which customers, and under what conditions.
Why volume alone is not enough for the foodservice assortment rationalization
Total volume is a useful indicator for situating a product's position within a range. It provides less direct information about the reasons for that position.
A recently launched product hasn't had the same amount of time to develop as one that's been established for several years. A format designed for a specific use doesn't necessarily appeal to the same customer base as a versatile product. A seasonal product can also seem weak when viewed outside of its peak season.
Comparing references first requires considering their sales conditions. Age, seasonality, distribution, availability, and promotional support can all alter the interpretation of the results.
This contextualization helps avoid expecting all products to play the same role. It doesn't justify systematically retaining minor references; it helps identify those that require further investigation before any decision is made.
Distinguishing between low diffusion and low rotation
Two products can generate similar volumes while exhibiting very different business situations. The first is sold in a limited number of depots, with consistent activity in each. The second is sold through a much wider network, but its sales remain low.
In the first case, the question may concern the possibilities of expanding distribution. In the second, it is necessary to try to understand why the commercial presence results in few sales.
Sell-out data allows us to examine the number of seller consignments and the sales volumes per consignment over a given period. Average sales per seller consignment provide additional insight into the total volume , provided that we compare consistent periods, units, and scopes.
The analysis must also take into account the progressive opening of depots: a reference deployed during the period does not have the same sales duration everywhere.
Finally, a warehouse with no observed sales is not necessarily a warehouse where the product is unavailable. It may be holding stock, experiencing low demand, or simply not yet having activated the product line. Sell-out indicates actual sales; field teams and the distributor help to understand the reasons for this.
Understanding which customers the product/service is most suitable for
An average national performance can mask a good fit for certain uses.
When data shared by distributors allows it, analysis by end-user type helps identify the segments that purchase a product and track their contribution over time. The Category Manager can then determine whether the product is struggling overall or performing well within a more targeted segment.
A product may deserve a place in a targeted assortment without needing to be distributed everywhere. A format suitable for institutional catering, for example, should not be evaluated solely on its performance across all establishments.
This review may lead to a reassessment of priority networks, the sales pitch, or deployment conditions. It also allows for preparation for a discussion with the distributor regarding the alignment between the product and their customer base.
However, it is important to distinguish between the performance of a segment and the behavior of each individual buyer. Aggregated data by type alone cannot determine whether the same customers make regular repeat purchases or if they have an alternative within the product range.
Cross-referencing commercial performance with product economics
A rationalization of product range also impacts profitability and industrial organization.
Maintaining a standard product may involve specific production runs, storage constraints, a limited shelf life, or particular raw material purchases. Conversely, a low-volume product can make a significant contribution to profit margins or fulfill a major commercial commitment.
Sell-out figures must therefore be considered in conjunction with internal data on margins, costs, and industrial constraints. They alone are insufficient to calculate the full profitability of a product.
The Category Manager's role is to bring together these different elements with the sales, finance, and manufacturing teams. The goal is to clarify what the company gains by keeping the product, what it could improve, and what it risks losing by discontinuing it.
Product range simplification can be relevant. It becomes more robust when it is based on an economic and commercial contribution examined as a whole.
Develop, target, rework, or remove: choose the appropriate action
Following the analysis, several decisions can be made regarding the rationalization of the Foodservice product range:
Develop the dissemination of a reference that works in active depots, when comparable networks or customers offer prospects to validate.
Target its deployment more precisely when it primarily meets the needs of certain uses, segments or distributors.
Rework the offer or its activation if the format, positioning or sales support seem to be hindering sales, after verification with the field.
Prepare for withdrawal when demand remains insufficient, prospects are limited, and economic constraints no longer justify its continuation.
Each strategic direction must be accompanied by a scope, a responsible party, and a deadline. When a recovery plan is adopted, it is useful to define from the outset the expected results and the date on which the decision will be reviewed.
A product retained in the range must have an explicit role and a plan consistent with that role. This discipline avoids repeating products out of habit while giving a measurable opportunity to those whose potential remains to be confirmed.
Prepare for the withdrawal and observe its effects on the range
The decision to withdraw a product opens a transition phase. Teams must anticipate stock depletion, communication with distributors, and solutions offered to affected customers.
When a replacement product exists, its suitability for the intended use of the withdrawn product must be verified. Two similar products in a catalog are not necessarily interchangeable for a catering professional.
After a product is withdrawn, simply tracking sales of the discontinued item provides little information. The key is to observe how business evolves across the entire product range and within the affected areas. Are sales volumes of the remaining products increasing? Are the customer segments still active? Are some distribution channels experiencing a decline?
These trends should be interpreted with caution. Seasonality, promotions, or changes in distribution can also explain the observed movements. Without sufficiently detailed data, a price increase for another product alone does not prove a transfer of the same customers.
This monitoring nevertheless makes it possible to identify situations that need further investigation and to improve future assortment decisions.
KaryonFood: informing decisions about the future of each product line
By centralizing and harmonizing sell-out data from multiple distributors, KaryonFood facilitates performance analysis by reference, warehouse and end-user type, according to available information.
For a Category Manager, this analysis helps identify under-distributed products, performance differences between distribution channels, and the segments where a product finds its niche. It provides a common basis for discussing actions to be taken with sales teams and distributors.
Streamlining a product range involves giving each item a justified place within the overall product strategy. Sell-out data contributes to this decision by linking a product's overall market share to its actual sales performance.
Are you preparing your next product range review? Discover how KaryonFood helps you analyze your assortments and identify the actions to take on your products.
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