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Tesco worries...continued

24/10/2014

1 Comment

 
One aspect that has emerged in the past days is that Tesco now thinks it has far too many SKUs. The range has apparently growth by 31% in the past 18 months, if Dave Lewis is quoted correctly here (£)
A common problem for both retailers and brand owners. SKU numbers rise and just have to be culled from time to time, in a clearly targeted exercise. 
It's all very well talking about the 80:20 rule, but, under pressure, no business wants to lose customers because they haven't got the particular item being sought.
Some thoughts:
1. maintain a 'one in, one out' policy with npd
2. have a cull of SKUs every 12 months
3. maintain a clear quantified focus on low selling SKUs and demonstrate how little business they account for, as part of regular internal reporting
1 Comment
Gavin Chalcraft
5/2/2015 09:27:50 am

Liz,

Been a long time! I saw your profile on Linkedin as we are connected to a couple of the same people. I read your blog and thought it interesting. The Pareto principle, while accurate in many facets of life, does become rather simplistic when faced with the challenge of SKU analysis. That said, if one were to only list those products that sell i.e. 20% of the most profitable SKU's, then one is faced with decreased manufacturing efficiencies and the lost visual impact of the remaining 80% of SKU's on the shelf. The latter issue is hard to measure, but has been proven to have an impact on sales and brand presence. Michael Hammer from the Harvard Business School proved this out in his book/consulting which he called Reengineering. It sought to cut the fat out of businesses, making them learn, mean, fighting machines. He made millions from it and almost all companies that had been Reengineered experienced decline. Like a marathon runner who cuts too much body fat, they eventually get sick and die.

Anyway, hope life is good with you. I left marketing full time back in 1998 to follow a passion in the arts and finally quit all marketing activities about five years ago.

Best


Gavin

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    Elizabeth Morgan comments on innovation and sustainability for consumer-facing businesses

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