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 lower margin product line which was not sold on the web. They did not realize that this effectively cannibalized their other sales, leading to profitability concerns.

Process

An analysis of 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 morale and profitability. The end result was a second product line change, which was part of a larger initiative. This increased value for the customer and restored profit margins.

Savings

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