Range Optimisation ‘Less is More’ – UK Health and Wellness Retailer
We supported a UK health and wellness retailer with 700+ high street stores suffering from significant range proliferation driving up working capital, reducing rate of sale and produced a confusing assortment for customers to shop.
To discuss how we can help you with similar challenges please contact Andrew Davidson.
The Problem
- Focus on innovation in new product development had led to an oversized product range;
- Majority of sales were being driven by a small proportion of the overall range with very low stock turns and high working capital driven by high MOQ’s and low rate of sale;
- An initial ‘under the radar’ trial found that reducing the range c.30% had minimal impact on sales / margin performance;
- This demonstrated that there was an opportunity to rollout a nationwide rationalisation programme but a detailed business case would be required to ensure all business functions were aligned on the benefits and risks.
The Solution
- 4C were engaged to work across the business to create an overarching business case for the range reduction initiative;
- A further proof of concept was run with a broader sample of stores to ensure the initial trial was not a one off and to provide performance figures that could be used in the final commercial analysis;
- Product substitutions for removal SKU’s were validated to ensure customer needs and missions were still well covered;
- Engagement with business stakeholders enabled risk mitigations including:
- excess stock reduction strategies to prevent excessive write off;
- Improved Merchandising and layouts;
- On shelf availability and forecasting closely monitored.
The Impact
- The final business case supported the nationwide rollout to 700+ stores recommending:
- c30% range reduction with a 2% improvement in sales / margin;
- 20% reduction in stock holding;
- Customer feedback confirmed improvements in conversion, ease of shop, ATV and customer perception of range.
- The business case further highlighted broader benefits:
- £15m working capital improvement;
- Supply chain benefits including warehousing efficiency, inbound MOQ optimisation, picking efficiency and In-Store availability;
- Further improved sales and margin benefits through increased own-label product participation.