Chapter 3. Low-Cost Strategies II: Delivering Low Costs Through Minimizing Product Proliferation

The second part of a retailer’s cost containment strategy deals with product proliferation. Too many retailers offer way too much choice in terms of brands, sizes, and varieties. Poor store profitability is often associated with product proliferation due to a retailer’s allocating too little space to its most profitable products (that have high inventory turnover or high profit margins) and too much space to products that really don’t sell that well (even though they may be partially supported through vendor allowances). Too much inventory also requires larger store formats with higher rental and utility costs.

The issue of product proliferation ...

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