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Skewering SKUs

When Wal-Mart emptied its shelves, consumers took their business elsewhere.

David M. Katz, CFO.com | US
September 29, 2010

Assortment Optimization

Reducing the number of products can help companies increase sales by as much as 40 percent while cutting costs by between 10 and 35 percent, according to research by Bain & Co. But the process of choosing which products will be discontinued can be hit and miss and retailers risk a customer revolt if they get it wrong. To help pick the right products to delist, companies are investing in technology to better pinpoint customer preferences. Shoppers benefit from the investment because the retailer can provide more precisely what products and promotions the shopper wants when and where they want them. Some of these technologies use the concepts of incrementality and transferable demand to help retailers determine which items should be sold based on customer demand, the competitive environment and a quantified understanding of the sales potential of each item.

Posted by Derek Smith | October 25, 2010 11:57 am

Caution

SKU Skewering ... Unilateral yea/nay from Finance? Perhaps. Caution please. Merchants know merchandise-if not, the problem is well beyond SKU's. Merchants, read Buyers, are key to sales. The success of any SKU is 101, viz., give the customer what the customer wants, at a price... the classic 5P's of marketing. Trust the Buyer, empower them, have them take responsibility and ultimately be personally accountable for the outcome of an item. Constructive collaboration is important and should be helpful, vice power positioning. Let the Buyer and their vendors do what they must. cervenak@kemperjoseph.com

Posted by Joseph Cervenak | October 08, 2010 01:54 pm

To SKU or Not to SKU

We recently completed an industry study that reinforces some of these points. http://globalblogs.deloitte.com/deloitteperspectives/

Posted by Richard Roth | September 30, 2010 02:30 pm

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