Reducing the number of stock-keeping units (SKUs) is a popular strategy for many retailers but is liable to backfire with consumers, according to new research from Nielsen. As part of Nielsen’s recent Consumer 360 conference, the research and consulting firmrevealed the resultsof its latest study of the SKU reduction question:
• 42% of retailers reduced their SKU offerings in 2009, but this resulted in an overall reduction in shelf assortment of 1%.
• 48% of retailers are making more room for store brand products.
• 7% of personal care product shoppers said that when a store doesn’t have the item they want, they won’t buy the category at all.
“In many cases, strategically reducing assortment can result in an improved customer experience and greater profitability,” said Stuart Taylor, vice president, custom analytics, The Nielsen Company. “Cut the wrong product, however, and the potential customer backlash could be costly.”
Cutting SKUs can backfire
June 18, 2010