Retail Analytics — Assortment Analysis


Exhibit 29.5   Assortment optimization.

Retailers are grappling constantly with a vast number of brands and items, as also the continual requests to list an ever increasing parade of new products. Their space is finite — as new items get listed, some items on the shelf need to be de-listed.

One approach to optimizing assortment is on the basis of sales volume, sales value and profitability. This is covered in detail across sections in Chapter Sales and Distribution. It is important also for the retailer to examine the proportion of shoppers who buy (% buyers), and particularly those who exclusively buy listed items. A low selling item might have relatively high base of shoppers who exclusively buy it. If the item is de-listed, some of the shoppers may switch to other stores, in which case the retailer stands to lose their total spend in store.

Exhibit 29.5 depicts an analysis of exclusive buyers and cumulative duplicate buyers of items for some category. The items are listed in order starting from the item with the biggest base of buyers. Observe, at the tail end, items r and v have a high proportion of exclusive buyers. Since these shoppers exhibit high loyalty to items r and v, the retailer should probably refrain from de-listing them; or do so only after careful consideration.

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What they SHOULD TEACH at Business Schools

What they SHOULD TEACH at Business Schools


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