Skip to main content

Think before you delist your slowest seller

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 overall sales terms is ranked at number 13 in terms of incremental sales value.

Think about it this way - there are 37 other products that should be delisted before your number 50 seller if you wish to optimise your overall sales. These 37 include your eighth best selling product. Why? Because shoppers are more likely to pick up an alternative to product eight than for product 50. Which means they simply do not spend the money in your shop.

The first product on its way out should be product 32, says the analysis.

Corner shop operators lacking the software wherewithal to accurately analyse their categories can still use the thinking. For every product that you plan to delist, ask yourself what the shopper would buy instead.

Comments

  1. Concidering the work I am currently undertaking on our cofectionery range This would seem pertinent and timely. Basket mix is important when looking at delisting items, when the Sun cut its margin last year I discovered that the average Sun buyer spent £4 with us every time they bought their paper. Brilliant as we sell between 30 and 40 a day.

    The Star buyers were no where near as valuable so when they did their second cut it went from our range.

    Steve

    ReplyDelete

Post a Comment

Popular posts from this blog

Digital disruption in the UK wholesale space

“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...

Five things to learn from Waitrose

Interim results from Waitrose this week confirm the industry figures that show the upmarket supermarkets and convenience stores are leading the market (albeit from a 4.2% share according to Kantar Worldpanel). Charlie Mayfield, the chairman, highlights many reasons for its success and here are five that local retailers should consider. Marketing works. Waitrose claims that more than 370,000 extra customer transactions resulted from its spring tie-up with Delia Smith and Heston Blumenthal in the first eight weeks. This autumn, it launches a cookery school. Engaged shoppers are more profitable shoppers! You need a value offering. 17 per cent of Waitrose sales are from its value range, called essentials. Momentum works. Its strategy is to bring Waitrose to more people in more places. It invested in 75,000 square feet of extra selling space in the first half of this year, including three convenience stores. In the second half of the year, it is adding eight convenience stores. Str...

The secrets of persuasion: No short cuts.

The best moment in my interview with Terri Sjodin, who teaches many of the world’s top corporations how to sell persuasively, is when she smiles at me and asks to hear my “elevator speech".   My mind literally goes blank. The author of Small Message, Big Impact , her new book on how to craft powerful messages that persuade people to listen to you, has thrown the gauntlet at me. There was nowhere to hide. I had just told her how I had used her book to write out my three minute speech to open the Local Shop Summit. She listened patiently to my pitch, thought for a moment, and said: “I bet you had an illustration in your mind of an independent who really capitalised on your ideas and has taken them to the bank.” I could swear she was reading my mind. I blushed and nodded. “So you should open with this story,” she said. “Start out by saying: ‘Let me open the conference by telling you a great story with a happy ending.’ So the audience will say to themselves: ‘He is goi...