Decisions over the future of thousands of lines at Tesco are being left in the hands of management consultants, suppliers warned this week. The Grocer can reveal the UK’s biggest retailer has tasked Boston Consulting Group (BCG) to conduct a range review across 40 categories, with a view to reducing its SKU count by up to a third, with Tesco set to press the ‘reset’ button at the end of August.
Tesco CEO Dave Lewis’ shakeup will see thousands of products removed from the shelves ‘literally overnight,’ with Tesco planning to shift to a simplified pricing structure and focus on better availability of key lines to position itself against the threat of the discounters.
‘This is a huge initiative,’ said one source. ‘They are removing as much as 30% of their range and it’s going to have dramatic repercussions. Dave Lewis has had consultants in right from the start and they are the ones who are determining where there will be range cuts.’ ‘They’re using Dunnhumby data to cow duct a complete review across all 40 categories and outsourcing a lot of this work to BCG because the timeframe they’ve set, the logistics of what they’re doing, would be impossible if the buyers had to complete that many reviews in that little time,’ said the MD of one leading branded supplier.
‘What Dave Lewis is doing is following up a brutally blunt pricing negotiation process with a massive range cull and he’s right to do it,’ added David Sables, CEO at sales negotiation experts Sentinel Management Consultants. ‘Lewis is short of the correct level of resource to be able to carry out something like this internally so it makes perfect sense that he has turned to consultants. It’s almost certainly an ‘in and out job.’ ‘They want to take away selection from buyers,’ added one supplier. ‘They want buyers to focus on price and order levels. They’ve found the basis of their trade has become only about overriders. It’s warped the listings, warped the customer experience, and warped pricing. That’s the rationale.’
Suppliers said the changes did not stop at range rationalisation with Tesco also set to revolutionise the positioning of different categories to make a more orderly shopping experience . ‘Everyone has their fixtures and flows in exactly the same way – this really is a radically different, new vision for the future,’ said one. ‘We have been working with BCG for some time on a number of things and we are looking at a review of ranges,’ said a Tesco spokesman. ‘The review is ongoing and no changes have yet been set. There is no specific change to the roles of our buyers but we have been saying we want to use front margin rather than back margin as the basis of our trading.’