From Our Print Edition

Many SKUs were cut during COVID because of supply shortages, not in response to consumer preferences. SKU rationalization based on today’s realities is overdue.

COVID — with its resulting supply shortages and logistics challenges — taught retailers they could get by with fewer SKUs. That’s certainly true. But these cuts were based more on lack of product supply than on consumer preferences. This wasn’t SKU rationalization at its finest; it was generally pragmatic, happenstance cutting done out of necessity.

NO SELF-CONGRATULATION

There’s a big difference, and self-congratulation for lower SKU counts is not likely warranted. Some of the SKUs deserved cutting; others most certainly did not, and need to come back. So, despite outward appearances, the long job of SKU rationalization is far from over. It won’t be easy.

Retailers have always believed in SKU rationalization, at least in principle. After all, time-honored research says that when consumers are shown too much variety, they don’t make any purchase decision at all. Yet when it comes down to making the cuts, retail decision makers are apt to say, “Yes, I’m in favor of SKU rationalization. Just not in my categories.”

But SKU rationalization is vital in frozen and refrigerated foods because these products must be merchandised in finite display cases. You can’t drop a pallet of ice cream just anywhere. And try as you might, you can’t use a pry-bar to stretch out those cases.

In recent years, the term “SKU curation” has become almost as popular as “at the end of the day.” But it’s a good term, because it suggests responsibility on several levels. For vendors, SKU curation means (or should mean) studying the retailer customer’s needs. Before presenting specific new products or suggesting merchandising ideas, the vendor should know the retailer’s shopper demographics, departmental emphases, margin contribution hurdles, competitive differentiation… you get the idea. If I’ve heard anything consistently in the years I’ve been writing about retail, it’s that vendors don’t do this enough. Instead, retailers still tell me that vendors too often “throw everything against the wall to see what sticks.”

Retailers still tell me that vendors too often ‘throw everything against the wall to see what sticks.’ That’s always struck me as unprofessional and, well, not very smart. Even rude.

That’s always struck me as unprofessional and, well, not very smart. Even rude. Seriously. Vendors should be doing their homework first, and not expecting the buyer/merchandiser to do all the heavy lifting. (Or go through encyclopedic presentations that generally find their way, unread, to the trash.) Would the consumer enjoy shopping a perishables department with 200,000 items? Of course not. There are too many choices as it is.

Of course, it’s up to buyers to know what their shoppers want, and present the best items to them. But if vendors aren’t helping with that process — and significantly so — they’re part of the problem. Do their new items drive price perception? Offer something unique rather than just “fitting into the category?” Will they cannibalize anything else? Will the dairy, deli, meat or seafood department get credit for the sales of certain frozen items at the register, and how might that affect merchandising dynamics? Will the products help set the stores apart from competitors? If slow-movers can’t get shelf space, is there a way to add them for just online sales? This has to be a partnership for it to work for both sides. A good rep is not an order taker, but a trusted consultant and a sales rainmaker.

IT’S A SKILL SET

Having said that, I also think it’s good that new technology and consumer data are making it harder for lazy and unprofessional buyers to hide. The ability to pick the right products isn’t an unlearnable art or magic — it’s a skill set that can be finely honed over the years — especially when combined with data and well-planned, defined processes. Recognizing this enhances long-term success.