On the day that Tesco unveiled a great set of financial results I was with a south coast independent retailer who says the major competitors for his three local shops are two Tesco Express stores. At the same time he says his business is booming. If in Tesco's model it is always reassessing the top 100 lines and giving shoppers their favourites if they make the top 100, my friend says he serves his shoppers with what they want, including the "just-delisted" and me-toos at good prices that he has nimbly sourced. This seems to be a sustainable business model but may be not as easy to achieve as my friend makes out!
Retailers need to introduce new products to provide their shoppers with "good news" and to generate interest. But for each new product that you introduce you need to consider delisting an existing line. Easy, you might think. I will just print out the list of products in the category and take off the one with the lowest sales. However, if you do this research from the US suggest you might be wrong. What you need to consider is what sort of demand you have for each product, a white paper by Demand Tec, a US specialist software provider shows. It says that there are two kinds of sales: incremental sales, when products add to the total shopper spend and are not readily substituted by another item transferable sales, where shoppers find an alternative easily when it is not available. Using its software, it shows a category with 50 products from top seller to bottom seller. At the same time it also measures the incremental sales each product provides. The number 50 in ove...
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