A product line analysis saves $200,000 annually

Client: Bricks and mortar retailer.

Situation

In a effort to compete with on-line sales, the client had introduced a product line which was not sold on the web. They did not take into account that this new product line had a much lower profit margin and it cannibalized their other sales, leading to profitability issues.

Process

Analysing the company statement of accounts revealed the increasing cost of sales, and this was then traced back to the new product line. Using this data, the leadership team conducted several brainstorming sessions to generate options, which were reviewed for impact on customer loyalty, staff acceptance and profitability.

The need to make a second second product line change was communicated to staff so they could comment and get comfortable with the change, before they had to explain it to customers. As a result of feedback, this was rolled into a larger initiative which increased value for the customer.

Savings

This change resulted in annual savings of over $200,000 and product sales remained as strong overall, despite facing more on-line competition.