In prior posts we’ve discussed the varying definitions of the Key Value Item (KVI) in retail. Setting aside the important differences, the core principle remains: KVIs are the most important SKUs in the assortment. And these items often warrant special treatment: competitive price monitoring, out-of-stock warnings, and other automated pricing monitoring.
We’ve worked with many retailers to build and maintain a list of their KVIs as top priority SKUs. And while every retail sector has its own specifics, there are a few general themes that can help identify your KVIs.
SKU-Level:
- Must be high coverage (Stores selling)
- Exclusive or Private Label, if applicable
- Whether Price Constraints apply (MAP or otherwise)
Category:
- Share vs. Competition, if available
- Trend (Comps and Share)
- Frequency of Shop
Financials:
- GM %: useful to monitor, but does not bear on whether is a KVI
- Markdown Frequency and Depth: KVIs are not typically hi/low priced
- Advertised vs. Unadvertised discounting mix
Velocity
- Total Sales, as a measure of importance
- Seasonality (peak to average): useful to diagnose trends
Customer:
- High Breadth of Customers
- High Customer Item Frequency relative
- Customer Research Levels (from web metrics)
- Lead Item % (from transactions, web, or survey)
Elasticity
- Base Price elasticity
- Promotion elasticity
Within each of these categories there’s the work of finding the actual datasets, metric calculations, balancing, and validation of the resulting lists to be done. Give us a shout, we’d love to help.