COLORADO SPRINGS — Retailers' increasing focus on SKU reduction programs has been a point of contention with some suppliers, but in many cases it appears trading partners are on the same page.
Panelists at a conference presentation here last week said partners need to work together to support these efforts.
“We think of this as assortment correction, and the important thing is to understand the customer,” said Ed Crenshaw, chief executive officer of Publix Super Markets, Lakeland, Fla., during a session of the Grocery Manufacturers Association Executive Conference. “We depend on trading partners to bring products with value for the customer.”
He pointed out that customer needs vary by market and even store. “Not every Publix store is exactly alike. South Florida is different than Nashville, Tenn.”
In reducing assortments, Crenshaw said Publix doesn't show favoritism to store labels over manufacturer brands. “Our category managers are just as quick to discontinue the store brand as a national brand,” he said.
Suppliers on the GMA panel said their organizations need to support retailers by streamlining assortments up front and limiting launches to products that really resonate with consumers.
“It starts in our shop,” said James Craigie, chairman and CEO, Church & Dwight Co. “We don't need to launch silly little SKUs. We should launch new SKUs consumers want.”
Gary Rodkin, CEO, ConAgra Foods, said his company takes a proactive approach on SKU reduction. “We want to figure out what we need to eliminate before the retailer,” he said.
He contended the industry “has been guilty of over-proliferation, and we have to make certain we don't continue that. Our customers are more discerning.”
Craigie said that while retailers are justified in reducing assortments, they should proceed carefully to avoid irritating consumers.
“Consumers want simpler shopping, but retailers shouldn't use an axe, but rather a scalpel,” he said. “They need to look at the entire category and what consumers want.”
Crenshaw said Publix takes into account potentially negative customer reaction in making decisions on elimination of SKUs.
“A store manager recently told me that the No. 1 complaint from customers isn't high prices or lack of front-end service; it's discontinued items. We know we'll upset customers when we discontinue, so we don't do this lightly. We put a lot of thought into assortment correction.”
The panel also discussed the meaning of value now and after the recession.
“Our belief is that value is here to stay,” Rodkin said. “There will be a value hang-on — people will look to save where they can. You won't go wrong in thinking value is here to stay.”