Why stocking an olive oil SKU no one buys makes perfect business sense

Assuming you run a tight ship, then you’re always looking for ways to optimize your assortment. Anything that’s not hitting a minimum sales volume is at risk. After all, shelf space is at a premium, and if it’s not moving, it should make way for something that is. Right?

Well, in theory, yes – but in reality, it’s more nuanced than that. 

Richer data delivers…

If the only data you’ve got to make assortment decisions is sales volume, then you’d be right. However, with a richer set of data, coupled with the ability to access insights from it, you could find you’re wrong about your initial thinking. 

If it transpires the people buying a specific high-end olive oil SKU are your most valuable customers (by margin and/or basket value) and the decision to de-range olive oil causes them to change their shopping behavior, such that you risk losing their category spend, or entire store spend, then you probably don’t want to stop selling that olive oil SKU. Ever.  

But how do you figure out if this is going to happen? The answer, as always, is hidden in the data. 

To find out, the first thing you need is some kind of shopper loyalty program that gives people a valid and compelling reason to reveal their identity to you. And there's nothing new about this. 

It’s about understanding all the details…

Now you need to understand, not at a segment level, but at an individual customer level, what each customer’s spend is on each SKU in the category, their entire category spend, and their entire store spend.  You can also throw in some other things like how many buy only one SKU from the category and nothing else. 

Flip the data…

With this foundation, you can flip it around to work from the SKU outwards to understand that the shopper of every SKU spends over the entire category and entire store. At that point you can draw a very clear picture that (for example) the shopper of a specific, poor selling olive oil SKU is important to your customers who spend more in category, and more in store than your average shopper.

Every organization with a loyalty program has this data somewhere, but for most, the pain of mining it to get to this level of insight is more than they can wear. 

Extract the high-value insights…

For others, however, 11Ants has proven transformative. Putting the ability to extract these high-value insights into the hands of anyone and everyone who wants them. 11Ants provides the answers to complex customer/basket-related questions quickly and easily.

Want to find out more?  Contact us for more information…