Recent quarterly reports reveal that a number of retailers are aligning their business models with the 'focus strategy'; one of the three generic strategies developed by Michael Porter often used by companies to gain competitive advantage. There appears to be a move by brands towards narrowing their product offerings to better meet the needs of their target markets, easing the complexity of their operations, and aiming to maximise growth in the long term.
Victoria's Secret's parent company, L Brand, Inc., has announced that it will develop only its "core merchandise categories" – namely its lingerie and beauty lines – and eliminate its apparel, accessories and swimwear offerings. This decision was reached despite the fact that L Brands, Inc. reported an increase in net sales of $1.027 billion for the five weeks preceding 2 April 2016, which represents a 5% increase as compared against the same period in 2015.
Burberry has also announced, as part of a three year plan to reduce costs and reorganise the company, that it will eradicate between 15 and 20% of its product line over the next year to concentrate only on pieces which define the brand.
The focus strategy trend, whilst growing, is not altogether new – in 2015 we saw UK supermarkets across the board (including Waitrose, Tesco, Asda, Sainsbury's and Morrisons) drop hundreds of products from their shelves in efforts to cut prices and increase efficiency. Olay's parent company, P&G, similarly discontinued approximately 20% of its product base in a bid to prioritise core items.
By decreasing product breadth and increasing product focus in key categories, companies increase their chances of being recognised by customers for what they do best; they also can simplify their operations and open up their potential to invest in the areas in which their brands may dominate in the long term.