Pare Down Assortments Selectively

Did you reduce your total inventory last year? That was an overarching trend for retailers. This year, are you thinking about streamlining your brand assortments? Considering that what is done by Wal-Mart affects much retailing practice, reducing brand assortments might be an overarching theme for your coming year.
     You see, the news is that Wal-Mart is eliminating Glad and Hefty food storage bags from the shelves, leaving only Ziploc and Wal-Mart’s private label brand, Great Value. Advertising Age reports this as being part of a wave of brand consolidations at Wal-Mart, Walgreens, and CVS.
     Cutting the number of SKUs can make life simpler for your retail operations. But to turn simplicity into profitability, pare down selectively.

• Start out by selecting categories where there isn’t substantial product differentiation. Food storage bags would qualify here.
• Selectively merchandise desired brands that other retailers have trimmed out. Starting in late 2009, the competing food storage bag brands poured big dollars into advertising, hoping to win the Wal-Mart beauty contest. So even though there might not be substantial product differentiation, the ad campaign probably created longings for Glad and Hefty. If you’d like to draw shoppers from Wal-Mart and not go head-to-head on Ziploc pricing, think about satisfying those Glad/Hefty longings.
• If you’re a large retailer or a member of a purchasing cooperative, become more selective in your expectations of the producers of your private label lines. Manufacturers pruned out of shelf space under their own name will become more interested in negotiating with you to stay in your store under your name. Keep in mind that with house brand names, customers are most likely to maintain purchasing habits when product specifications don’t change abruptly. But few customers would complain about improvements in quality that could come from your selectivity in expectations.