In Canada, the Globe and Mail has a story about SKU rationalization, reporting on the mixed results that various retailers have experienced. Examples:
“Several months ago Wal-Mart Canada Corp. decided to overhaul one of the staples of its grocery business – the peanut butter aisle. It dropped two of its five lines of peanut butter to free up scarce shelf space for cinnamon spreads. But the decision didn’t cost the retailer a single jar in sales. With fewer selections to browse, customers wound up purchasing more than before.”
“Customer feedback was quick when Loblaw Cos. Ltd. recently culled about 10 per cent of weak-performing products from a store in west Toronto. The retailer is now restocking about half those items because customers missed them. ‘We knew we’d get probably about half of it wrong,’ Loblaw executive chairman Galen Weston told shareholders earlier this month.”
The Globe and Mail writes, “After years of tempting customers with ever expanding arrays of brands, hues, sizes and flavours, they’re racing to simplify their offerings. The recession has encouraged them to focus on top sellers and private labels while throwing marginal products overboard.
“Storekeepers are culling their product lines to trim costs, reduce consumer confusion and ultimately boost sales. Reducing the number of products can help companies increase sales by as much as 40 per cent while cutting costs by between 10 and 35 per cent, according to a 2007 study by consultant Bain & Co ... While picking the wrong products to dump can lose sales, a growing body of evidence suggests that reducing the number of products on the shelf can improve the overall shopping experience. The average shopper takes just 2.5 seconds looking for an item and notices only half the products on a shelf, according to research by Procter & Gamble Co., the consumer products giant.”
“Several months ago Wal-Mart Canada Corp. decided to overhaul one of the staples of its grocery business – the peanut butter aisle. It dropped two of its five lines of peanut butter to free up scarce shelf space for cinnamon spreads. But the decision didn’t cost the retailer a single jar in sales. With fewer selections to browse, customers wound up purchasing more than before.”
“Customer feedback was quick when Loblaw Cos. Ltd. recently culled about 10 per cent of weak-performing products from a store in west Toronto. The retailer is now restocking about half those items because customers missed them. ‘We knew we’d get probably about half of it wrong,’ Loblaw executive chairman Galen Weston told shareholders earlier this month.”
The Globe and Mail writes, “After years of tempting customers with ever expanding arrays of brands, hues, sizes and flavours, they’re racing to simplify their offerings. The recession has encouraged them to focus on top sellers and private labels while throwing marginal products overboard.
“Storekeepers are culling their product lines to trim costs, reduce consumer confusion and ultimately boost sales. Reducing the number of products can help companies increase sales by as much as 40 per cent while cutting costs by between 10 and 35 per cent, according to a 2007 study by consultant Bain & Co ... While picking the wrong products to dump can lose sales, a growing body of evidence suggests that reducing the number of products on the shelf can improve the overall shopping experience. The average shopper takes just 2.5 seconds looking for an item and notices only half the products on a shelf, according to research by Procter & Gamble Co., the consumer products giant.”
- KC's View:
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Seems to me that one has to be careful about jumping to conclusions about SKU rationalization.
It probably works for some stores. Not so much for others.
This is particularly interesting in view of the fact that in the US, there were a lot of stories not that long ago about how Walmart actually over-edited some of its grocery departments, and had to backtrack because too few items prompted too many customers to go elsewhere to shop.
I’m not sure it is the number of products on supermarket shelves that is the real issue. For me, it is more important how the store communicates about the products they carry....informing people about the differences between one item and another. Furthermore, I think it is easier for stores that establish from the beginning that they have an edited grocery selection - saying right up front that they are recommending the best and most relevant products - to take such an approach. It is harder to just go from, say, 45,000 SKUs to 35,000 SKUs without affecting the way people view the store...unless the move is well-positioned and explained.
