As the Tesco management-cull continues in high profile, the 30% product-cull remains beneath the pre-September radar. In the meantime, NAMs have to speculate and focus on the ‘no-brainers’, or wait and see….
One obvious criterion, apart from cutting overlap and de-duplicating ranges/categories, has to be relative rate of sale. In other words, given that supermarketing (!) is an extreme version of the 80/20 rule, and a key issue for Tesco has to be what to do about the long tail of slow-selling SKUs...
One approach would be to agree an economic tail-length and simply cut off the rest – the ‘P&G approach’?
This would obviously result in issues re space redundancies, franchising the freed-up space, or even outlet disposal.
An alternative way forward would be to acknowledge that the long tail exists in many categories because demand exists, albeit in low purchasing frequencies. The problem of viability arises because of the relatively high cost of bricks & mortar space, and the need for physical productivity.
However, in online retailing, selling space is limitless and is available at minimal cost...
Does this mean that Tesco will simply shift ‘long tail’ SKUs into their online offering, leaving ‘best sellers’ in-store?
In other words, realigning the business to focus on core strengths of B&M retailing (simpler offer), and making online more productive (the Unilever approach?)
I wonder which way ex-Unilever Dave Lewis will choose?
One obvious criterion, apart from cutting overlap and de-duplicating ranges/categories, has to be relative rate of sale. In other words, given that supermarketing (!) is an extreme version of the 80/20 rule, and a key issue for Tesco has to be what to do about the long tail of slow-selling SKUs...
One approach would be to agree an economic tail-length and simply cut off the rest – the ‘P&G approach’?
This would obviously result in issues re space redundancies, franchising the freed-up space, or even outlet disposal.
An alternative way forward would be to acknowledge that the long tail exists in many categories because demand exists, albeit in low purchasing frequencies. The problem of viability arises because of the relatively high cost of bricks & mortar space, and the need for physical productivity.
However, in online retailing, selling space is limitless and is available at minimal cost...
Does this mean that Tesco will simply shift ‘long tail’ SKUs into their online offering, leaving ‘best sellers’ in-store?
In other words, realigning the business to focus on core strengths of B&M retailing (simpler offer), and making online more productive (the Unilever approach?)
I wonder which way ex-Unilever Dave Lewis will choose?
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