UNIVEG Katope UK

Asda cuts ranges to discount prices

27th February 2009

Customer’s focus on price had led Asda to intensify its range rationalization strategy in order to increase space for more ‘Value’ lines as the recession continues to deepen.

In a stock rationalization and cost cutting move, Asda is removing up to 30% of branded products from 10 grocery categories. "In certain ranges we are taking 20%-30% of our SKUs out, freeing up space for the key value items. It is across the board," said chief merchandising officer Darren Blackhurst.

Asda first started range reduction in 2007. Taking out lines which they felt were virtually indistinguishable from other items and would not be missed by customers. An example was the removal of I Can't Believe It's Not Butter, because Asda felt that including Utterly Butterly in the range was adequate.

Blackhurst said Asda had adopted a "less-is-more approach to ranging" that would enable the company to cut prices, as the lines that remain "have more space because we are removing some of the clutter." "It makes it simpler for stores to operate and saves us money."

Asda believe that by maintaining the really major brands, customers are not put off, as it is price which is most important to many at this current time.

It is in the supply chain where most of the savings will be made, it is easier to transport more of one item from one supplier than many in smaller amounts from different sources. Picking at warehouse level is easier for the same reason, as is shelf stacking and stock taking in store.

Discounters operate on very simple structures with small ranges and do so successfully. Asda is just using the same strategy but on a larger scale.

Obviously for suppliers their will be winners and losers but Blackhurst said suppliers were being co-operative. "We are trying to work in a constructive way with suppliers to make sure everyone has an equal chance to invest in our offer. I think they are being very understanding of the process."


Source: Fresh Produce Journal

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