Originally published by Quantzig: Merchandising and Assortment Optimization Help Retailers Optimize Stocks
Introduction
In the fiercely competitive world of retail, success demands more than just offering products; it requires a strategic approach to stock optimization. This article delves into the critical importance of Merchandising and Assortment Optimization strategies, shedding light on their ability to customise distribution, enhance transaction efficiency, and drive tangible benefits. For retailers striving to stay ahead in an ever-evolving industry, where consumer preferences fluctuate and trends shift rapidly, these strategies are instrumental in ensuring a position at the forefront of the retail game.
Importance of Merchandising and Assortment Optimization in the Retail Sector
Customising Distribution Based on Hyper-local Needs:
In retail, one size does not fit all. This section explores how Merchandising and Assortment Optimization empower retailers to scrutinise local data and trends, allowing them to stock products tailored to the specific clientele in each location. Customisation enhances customer satisfaction and drives sales by aligning inventory with the unique demand of the community.
Improving Units per Transaction per Customer:
Efficiency in each transaction is vital for retail success. This part highlights how effective Merchandising and Assortment Optimization can lead to higher units per transaction per customer. The ability to suggest complementary products, upsell, or cross-sell not only boosts revenue but enhances the overall shopping experience, fostering customer loyalty.
Top Benefits of Merchandising and Assortment Optimization in the Retail Sector
Reduce Inventory Holding Value and Carry-over Volume:
Excessive inventory can be a financial burden. Merchandising and Assortment Optimization precisely manage inventory levels, reducing holding value and minimizing carry-over volume. Lower inventory costs result in improved profitability.
Increase Revenue per Sq. Ft:
Space in retail stores is valuable. This section illustrates how optimizing product placement and assortment can increase revenue generated per square foot of store space, maximising profitability and store space utilisation.
Higher Footfall and Higher Purchase Rate:
A well-optimized retail assortment strategy attracts more foot traffic and converts visitors into buyers. This results in increased sales, showcasing the importance of Merchandising and Assortment Optimization in driving higher footfall and purchase rates.
Conclusion
Merchandising and Assortment Optimization stand as the cornerstones of retail success in today’s dynamic market. This section underscores their significance in customising distribution, improving transaction efficiency, reducing inventory costs, and increasing revenue. Retailers prioritising these practices are poised to thrive in the ever-evolving retail landscape.
Success Story: Elevating IT Excellence
Client Details:
A Leading IT Company in the United States
Challenges:
- High Carry-Over Volume Each Season leading to financial losses.
- Frequent Stockouts for Popular Sizes, resulting in lost sales opportunities.
- High Inventory Holding Cost per Store impacting profitability.
- No growth in unique customers per store, indicating a lack of expansion in their customer base.
Solutions:
To address these challenges, the client implemented a range of Merchandising and Assortment Optimization solutions:
- Consumer Choice-Based Assortment Optimization Models.
- Style and Size Level Sales Forecasting System.
- Category Walk-Out Minimizer Tool.
Impact Delivered:
- 30% Reduction in Inventory Holding Costs.
- $14 Million per Store Type per Year Improvement in Revenue.
- 37% Improvement in Footfall and 10% Improvement in Promo Uplift.
