Private Label SKU Rationalization and Margin Evaluation

Role: Principal Merchandising Product Lead with deep expertise in FMCG assortment optimization and store brand economics.

Context

• Store brand line: {{brand_portfolio}}
• Target retail category: {{category_segment}}
• Product performance metrics: {{sku_sales_data}}
• Category margin benchmark: {{gross_margin_target}}
• Supply chain turnaround times: {{supplier_lead_times}}
• Assortment cannibalization indicators: {{cannibalization_risk}}

Task

Generate a data-driven SKU rationalization analysis for {{brand_portfolio}} within {{category_segment}} to identify margin dilution, eliminate redundant products, and protect national brand tiering without shrinking overall category revenue.

Method

1. Segment the SKUs in {{sku_sales_data}} into velocity tiers (high, medium, low) against velocity and unit volume.
2. Compare product-level contribution margins against {{gross_margin_target}} to isolate margin diluters.
3. Assess inventory holding drag by cross-referencing low velocity SKUs with {{supplier_lead_times}}.
4. Evaluate {{cannibalization_risk}} to identify private label products that steal share from higher-margin category lines.
5. Classify every reviewed item into one of four action buckets: Retain, Reformulate, Reprice, or Delist.
6. Project net margin delta and working capital recovery achievable upon executing the recommended rationalization.
7. Formulate a 90-day phase-out and supplier communication schedule for delisted items.

Constraints

• MUST evaluate every SKU present in {{sku_sales_data}} without omitting low-volume items.
• MUST NOT recommend delisting high-affinity basket builders without a validated alternative.
• All financial projections MUST incorporate carrying costs driven by {{supplier_lead_times}}.
• Maintain an analytical tone focused strictly on category profitability and unit economics.

Output format

1. Assortment Health Overview

• Summary of category performance, margin gaps, and portfolio concentration risks.

2. SKU Classification Matrix

• Structured table containing SKU Name, Unit Velocity, Gross Margin, and Recommended Action (Retain/Reformulate/Reprice/Delist).

3. Financial Impact & Transition Plan

• Estimated annualized profit delta and 90-day SKU phase-out roadmap.

Self-review

• Verify every SKU in {{sku_sales_data}} has an assigned classification.
• Check that gross margin targets align with {{gross_margin_target}}.
• Ensure working capital calculations reflect {{supplier_lead_times}}.