01 August 2010

Reducing Assortment II

About a month ago we posted on the subject of reducing assortment, or retailers removing brands and SKUs from their shelves in an effort to make shopping simpler for their customers. In other words, reducing assortment is a matter of reducing complexity. Unfortunately it also seems to be a matter of reducing sales.

Ad people discover retail

This situation is starting to hit the radar screen of ad industry people. For example, this month AdAge.com published a comprehensive report, focusing mainly on Walmart and its Project Impact. The article comments were pretty good, mentioning other retailers' initiatives

Other articles worth reading

Walmart’s “action alley” started getting crowded again in March, with big displays from Pepsi and the New Moon DVD that month. For a hybrid industry/consumer look at the effect in stores, check out this post from Wallet Pop last week.

Hub Magazine -- a publication worth reading in general -- ran an article called "The Walmart Crapshoot", which offers an insightful analysis of Project Impact, including an important historical comparison between Walmart and Kroger.

What will Walmart look like this Christmas?

You can read a lot on the Internet, of course, but there's nothing like a good store check to figure out what's really going on. The next few months will be interesting as Walmart decides how their stores should look as we approach Black Friday and the Christmas shopping season.


  1. Watching the whole project impact and now the apparent step-back, as an outsider, has been fascinating.

    To me the issue is that Project Impact has multiple elements:

    1. Walmart stores are cluttered and hard to shop, with a very poor signal to noise ratio for their visual merchandising.

    2. Walmart has a lot of SKU's in many categories, and there is an optimal amount of choice to enable purchase decisions (more is not automatically better via Paradox of Choice, etc...).

    3. Walmart has historically given equal weight and effort to all product categories and that's probably not strategic.

    4. Walmart generates significant revenue from their merchandising accrual, co-op, and in-store advertising programs and wants to maintain that revenue even in the face of SKU rationalization.

    Project Impact has initiatives in it to address 1-3 above, and simultaneous with Project Imapct, Walmart deployed the SmartTV network (i.e. Walmart TV 2.0) to address #4.

    Now that they aren't seeing the performance they need, they have to figure out if it's related to their recent efforts.

    I suspect that they didn't get their category and SKU rationalization exactly right and that has some effect on financial performance.

    But if I were advising Walmart, I would remind them not to throw the baby out with the bathwater. They do need to figure out the right SKU assortment to meet their shoppers needs, they do need to make their stores easier to shop, and they do need to make extra investments in strategic product categories.

    Getting more "ad" dollars from vendors is not the solution. All the recently articles about how in-store advertising has "finally arrived," based on some recent metricts published by the Walmarts Ad sales team are a bit self-serving. I've tried to debunk them a bit here: http://retailgeek.com/2010/07/22/walmart-digital-merchandising-statistics-dont-trust-an-ad-man/

  2. Bah... posted on the wrong account, didn't mean to be anonymous. Sorry.

    Jason aka Retailgeek