The pound shop is back in fashion, with widespread media coverage of the success of Poundland, which may be an indicator of a return to thrift by the UK's shoppers. The ability of Poundland, run by c-store pioneer Jim McCarthy, to stock big brands at £1 - its top selling line is Nescafé coffee 100g - "provides a halo effect for the rest of the store". On the face of it, this seems to justify McCarthy's boast that his shop is about amazing value every day. But the shopper always decides what is value and what is not and the heart of pound shops is the ability to provide "useful stuff" like backscratchers, foot long shoe horns and feather dusters that no-one knows the price of. As the Guardian sums up, the shopper may not "actually, you know, need the stuff". The pound price point is having its hour but good retailers know value is a constantly shifting target. You have to keep your offer relevant and fresh and get the price right.
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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