18337 Mon, 03/22/2010 - 6:00pm
So, the latest retail rocket science theory is to start condensing assortments around key brands, eliminating others and consolidating ordering from fewer suppliers.
This gives the store more buying power as its orders get larger as well as making it easier for retail operations and stocking departments to do their jobs. It may even allow the store to offer an exclusive brand not available elsewhere.
It’s a win-win situation ... except for one thing: If your store eliminates a brand a shopper wants—and she really wants it—she is going to walk out of your store and into one that still has it and you’re going to lose the sale.
And there’s no win in that.
Assortment reduction is nothing new, certainly not in home. Retailers have been building on their best brands and tossing out the lame-o ones for years. But what we’re seeing is something very different.
Take batteries, for instance. Stores are starting to choose between Duracell and Energizer and getting rid of the loser. This is not dropping the Acme Battery brand. This is eliminating a powerhouse, nationally advertised and promoted, well-known brand that has sold gazillions of batteries over a very long period of time.
If a store is doing it to make its life and operations easier, then that store has forgotten what’s it in business to do, which is to serve its customer.
More importantly, if the store has done it to gain an exclusive, it has forgotten the flip side of that equation: for every exclusive there has to be an exclusion. And that trade-off isn’t always worth it.
Dropping these big national brands is a very risky proposition. Costco recently played chicken with Coca-Cola, eliminating its products as it tried to negotiate a better deal. But this is a case where Coke had the upper hand. A Diet Coke drinker is not going to switch to Diet Pepsi. She’s going to switch to Sam’s Club.
Reminds me of the old joke about the airplane passenger watching the maintenance crew working on the engine on a plane. “What’s the problem?” he asked, to which a flight attendant said, “The pilot doesn’t like the sound of engine number two.” “What are they doing?” he asked, the response being, “They’re changing the engine.”
Two hours later, the plane, with its new engine, pulled back to the gate. “Now what’s the matter?” “The pilot still doesn’t like the sound of engine number two?” The passenger asked, “So, what are they doing now?” The response: “We’re changing pilots.”
The same thing could happen to retailers who are excluding products with the aim of getting exclusives—or even worse, just to make their operations simpler. They are at risk of being replaced by their passengers—customers—who will go elsewhere to get what they really want.
Retail roulette can be a deadly game for stores. “Give the lady what she wants,” Marshall Field said a couple of retail lifetimes ago. He could have added, “... or she’ll go someplace that does.”