Chains Continue to Rationalize SKUs
Wal-Mart cut SKUs. Not too long after, it added a whole
bunch back. Despite some evidence that consumers do not take kindly to having
their favorite brands taken off the shelf, more than 40 percent of retailers
plan to cut SKUs this year, according to Nielsen.
A number of high-profile retailers
including Ahold, Kroger, Supervalu and Walgreens have engaged in SKU rationalization
programs in recent years. While there is no doubt that many stores carry
more products than consumers buy, the question is — which ones should go?
of the findings of the Wal-Mart effort, according to RetailWire sources,
is that brand loyal consumers don’t always trade for an alternate product in
the store and at times walk — away not only from buying items in a given category
but also the store.
Nielsen’s findings were in line with this view, showing,
for example, that seven percent of shoppers looking for a personal care item
would leave one store to go and find the product at another location.
"The message to retailers is to choose carefully when it comes to deciding
which products to trim," Stuart Taylor, vice president of custom analytics
at Nielsen, said at the company’s Consumer 360 conference.
Discussion Questions: Do you think that SKU rationalization efforts at retail
in recent years have been successful or have they gone too far? What effect has
SKU rationalization had on the ability of retail businesses to differentiate
from one another?
[Editor’s Note] A July 2009 poll of RetailWire readers found 75 percent
thought ongoing SKU rationalization efforts at retail were "very" or "somewhat
healthy" for the business. Only 22 percent of respondents thought retailers
were going too far.