Rule of 17 – who cares? I do. And, if you’re a retailer, here’s why you should too
Kevin Sterneckert
Vice President of Strategic Alliances | Chief Strategy Officer, Chief Marketing Officer
Is there such a thing as too much choice? Of course, there is.
Whether it’s on a restaurant menu, or at the shelf in your local grocery store, we’ve all experienced the feeling of being overwhelmed by the options. In fact, our inability to process both too many choices and, secondarily, similar choices within the vast array of those options can result in complete inaction. Yes, retreat with no choice made at all.
In fact, there’s research today with leading retailers that spotlights the fact that up to 17% of items in a given category are duplicative in nature. With this ‘Rule of 17’ in mind, it’s clear that retailers must come to terms with determining that category duplication is very much an issue to prioritize – and then speedily work to resolve it.
Reducing SKU duplication and refining category assortments (if done properly) improves differentiation and simplifies the buying process.
The proven results are:
- Increased equivalent unit volume
- Increased revenue
- Increased profit
- Increased inventory turns
- Decreased Inventory
- Decreased warehouse inventory slots
- Increased collaboration between retailers and CPG companies
Retailers can leverage artificial intelligence, such an AI-enabled Personal Decision Coach, to gain significant advantage to adjust categories with the confidence and backing of fully vetted data that is constantly improved by machine (and deep) learning.
Armed with understanding the problem and the right category management technology, retailers can address inventory duplication and gain maximum revenue growth, profitability, and efficiency, from their assortment process.
Discover how the Rule of 17 can drive profitable revenue growth
Adjunct Professor Of Marketing at Boston College
5 年Kevin, starting a discussion about assortment rationalization from the customer's point of view--the paradox of choice and mixing in the conundrums of duplication and distinctions without differences brings home an important point. Retailers should anchor assortment planning in customer experience, not merchandise performance. CX manifests in metrics like transferable demand and walk-rates. Customer decision trees fall short as they're anchored in product attributes, not customer intents, needs, and expectations. Key too is the fact that CX exists in personal, social, and market contexts that extend well beyond the range, depth, and breadth of assortments, price points, promotional tactics, planograms, store layouts, and omni-channel choices in endless aisle and multiple pick-up and delivery options.?
One large grocery chain in the UK uses Artificial Intelligence to manage 430 million calculations and make 13 million automatic decisions every single day. This is not possible for retailers that do not use AI in their merchandise management and inventory management functions. More SKUs and more inventory is not better for the shopper or the retailer. More is inefficient and kills profits, as the Rule of 17 points out.