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Tesco Looking To Reduce Product Range By Up To 30%

| International retailers

Tesco is reported to be working with external consultants to reduce its product range in some categories by up to 30% in an effort to simplify its offering and cut costs. .

A report by The Grocer at the end of last week said that the ailing retailer had hired the Boston Consulting Group (BCG) to review the range in 40 categories which could lead to cuts in the number of SKUs of up to a third. The report said that move, which is expected to be carried out by the end of August, is part of Chief Executive Dave Lewis’ efforts to counter the threat of discounters by simplifying Tesco’s offer and pricing structure, whilst focusing on improving availability of its best-selling lines.

Lewis is said to have bought in BCG due to the short timescales involved and the fact the buyers would not have time to complete that many range reviews with them instead focused on price negotiations and order levels. The trade magazine said the data from dunnhumby is being used conduct the reviews. The cuts are likely to hit many of Tesco’s smaller suppliers with niche products.

A Tesco spokesperson quoted by The Grocer admitted that the retailer was working with BCG on the review of its ranges, adding: “The review is ongoing and no changes have yet been set.”

Large Tesco stores can stock up to 90,000 different SKUs compared to less than 2,000 in typical Aldi and Lidl outlets. For example, in air fresheners Tesco offers over 200 different options, whilst in tomato ketchup, the chain sells an array of 28 different sauces and sizes compared Aldi where there is just one ketchup in one size.

Listing fewer product lines could also help Tesco save money as it will make it easier for staff to fill shelves and manage stock. Lewis is looking to trim running costs by £250m a year and last week confirmed plans to close 43 unprofitable stores. The retailer has also started consultations with staff at its head offices which could result in thousands of job losses.


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