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I smell a (SKU) rat

BY Rob Eder

“I have read dribs and drabs of this in different publications over the last couple of years, but this (“7 Deadly Sins of SKU Rationalization,” Drug Store News, June 7, 2010) really pulled it all together.… Hopefully some of the retailers will wake up and read this and understand what they’re doing in terms of customer loyalty, traffic, profitability and so on.”

That’s an excerpt of a voicemail I received from a former top executive of a chain that Drug Store News covers. As I am certain this veteran retailer would prefer to remain anonymous, we will not identify him/her for the purpose of this discussion. Really, it’s not important who said it; we have been getting an awful lot of comments like that in the wake of our June 7 cover story.

And so far, no one’s told us we’re crazy.

News stories continue to surface that lend further credence to the idea that retailers may have cut too much, too fast, and that the pendulum already may have begun to swing back in the other direction. Walgreens president and CEO Greg Wasson noted in the company’s most recent earnings call that the chain had “added back several hundred products” in fine-tuning its Customer Centric Retailing initiatives.

Meanwhile, The Nielsen Co. released a report that showed that as many as half of all consumers said they may shop somewhere else if they notice a retailer has “SKU rationalized” their favorite product out of the store.

And you can easily make the case that SKU rationalization played at least some role in the recent changes at Walmart, which on June 29 announced that Bill Simon had been named president and CEO of Walmart U.S., assuming vice chairman Eduardo Castro-Wright’s responsibilities for the $258 billion division. “[Bill Simon] is a talented strategist who will focus on growing our U.S. business by increasing customer traffic, upholding our price leadership and making sure that we have the right products in every store,” Walmart president and CEO Mike Duke wrote in a memo distributed to employees, which the company made available to the media.

“Clearly, Walmart didn’t make this change because it is overjoyed with the performance of its U.S. stores, where weak business trends have raised concerns about the effectiveness of that broad slate of merchandising, marketing and operations initiatives collectively referred to as Project Impact,” wrote Mike Troy—editor of Drug Store News’ sister publication RetailingToday.com —in the Drug Store News DrugFIX, a weekly e-newsletter that analyzes the industry’s top stories of the week.

Within a matter of days, chief merchant John Fleming announced he would be leaving Walmart.

What do you think about the SKU rat trap? Send your thoughts to reder@lf.com.

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FDA advisory committee shoots down Vivus’ Qnexa

BY Alaric DeArment

MOUNTAIN VIEW, Calif. The possibility of a new drug for treating obesity suffered a setback Thursday as a Food and Drug Administration advisory committee voted against recommending its approval.

The FDA Endocrinologic and Metabolic Drugs Advisory Committee voted 10 to 6 against recommending approval for Vivus’ drug Qnexa (phentermine and topiramate), citing safety concerns such as the possibility of psychiatric problems and birth defects.

“We appreciate the advisory committee’s recognition of obesity as a significant health crisis and the challenges associated with the treatment of this disease,” Vivus CEO Leland Wilson said. “We are disappointed with the advisory committee’s vote.”

The company said it would attempt to address the committee’s concerns. An advisory committee vote is a recommendation, and while the FDA will take it into account when deciding whether to approve a drug, it is not bound to follow it.

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Post-it launches Shopping Genius widget

BY Allison Cerra

LONDON 3M has developed a bargain-shopping widget with the help of its Post-it brand.

Inspired by usage of the classic Post-it note as a shopping list, 3M has developed an evolution of the shopping list for the digital age called Post-it Shopping Genius. How it works: Post-it Shopping Genius sits on your computer desktop, keeping an eye on the price changes for you, locating the cheapest price, and letting you know when it changes. The customizable application enables you to choose from thousands of electricals, durables and other consumer goods, and track up to five at a time.

The application — which can be directly downloaded from http://bit.ly/Post-itGenius and is available on iGoogle, Mac OS X desktop and Windows 7 / Vista desktops — displays up-to-date prices on many thousands of products, which are searchable within the tool.

In related news, 3M announced that it is offering a monthly monetary prize of 1,000 GBP ($1,542) or the value of a user’s shopping list if less as an incentive to those who refer the Shopping Genius application to a friend.

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