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In the highly competitive market for home and personal care products, one leading company recognized the need to reduce its product assortment by up to 50 percent in the next year.
Senior executives were concerned, however, that the current stock keeping unit (SKU) rationalization methodology used was not intelligent enough to meet this goal. Additionally, executives were interested in how the company could leverage information about the effect of SKU on competitors in its customer negotiation strategies.
Accenture used its Performance Optimizer software, which provides analytics-driven retail channel optimization, to create different SKU rationalization deletion scenarios based on attribute importance and profile. In addition, a list of SKUs was created that ranked them in order of deletion priority for national portfolios and specific accounts.
The analysis showed that the company could reduce its national portfolio size by more than 20 percent with only an anticipated 0.2 percent loss in sales. Accenture recommended a 20 percent portfolio reduction, which it expects will boost sales by $29 million and profit by $21 million for the current year as compared to the company’s existing methodology.
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