The Short- and Long-Term Impact of an Assortment Reduction on Category Sales

TLDR

The study evaluates the short‑ and long‑term impact of a 25% item reduction on category sales. The authors collaborate with a major Dutch retailer and analyze sales data before and after the reduction. The reduction causes substantial short‑term sales losses mainly from former buyers of delisted items, but attracts new buyers who partially offset those losses, resulting in only a weak negative long‑term effect while also improving perceived search efficiency and reducing actual search time.

Abstract

In a collaborative study with a major Dutch retailer, the authors assess the short- and long-term effects of a 25% item reduction on category sales. On an aggregate level, a major assortment reduction can lead to substantive short-term category sales losses but only a weak negative long-term category sales effect. Short-term category sales losses are caused mainly by fewer category purchases by former buyers of delisted detergent items. However, the results also show that the assortment reduction attracts new category buyers. These new buyers partially offset the sales losses among former buyers of the delisted items. The collection of supplemental process data on assortment perceptions and actual search time in the test stores before and after the assortment reduction provides evidence that delisting results in an increase in perceived search efficiency and a decrease in actual search time.