Supermarket shoppers pay to look at 20 different lines but they only buy one, says Paul Foley, who heads Aldi in the UK. Unlike the big four grocers, his approach is to stock only one type of baked bean. By doing so he can deliver better quality at a lower price. Aldi delivers two benefits to its shoppers, says Foley. First, they save time as they do not have to select products from displays cluttered with brands they don't want. Second, they understand the value proposition and are not taken in by the "cheapest-on-display" measures used by his competitors. Thrifty shoppers from all income levels are visiting Aldi, he says. When the recession is over, they may stay. However, thrifty shoppers from all income levels have always been looking for a bargain. In the 1970s my mother ganged up with her friends and took it in turns to shop at the wholesale markets for fruit and vegetables, meat and fish. The bigger obstacle to the Aldi approach may be that it is impossible to get the one product right for all people. While shoppers may like their beans, they may not like their pasta? The proposition of one-size-fits-all is easy to understand and difficult to execute. Nimble independent retailers should be able to find a way to compete.
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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