A tactical guide to finding your Key Value Items (KVIs)

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.