DemandTec

Incorporate Transferable Demand into Assortment Decisions through Sophisticated Optimization Science

Assortment Optimization
A key element of DemandTec Assortment & Space is Assortment Optimization, a software service that includes advanced modeling and optimization science to help retailers create efficient, customer-centric assortments. This science is based on a quantitative understanding of incrementality, which is an item’s ability to increase overall category sales or profit, and transferable demand, which is the degree to which sales volume shifts to similar items in the category or leaves the store when an item is delisted.

Assortment Optimization can also incorporate market data (e.g., IRI, Nielsen) to identify potential item additions. With Assortment Optimization, retailers can create optimized assortments based on multiple criteria, including sales, profit, space productivity, and Gross Margin Return on Inventory Investment (GMROII). Merchants also have the flexibility to combine their optimization goals with additional controls to ensure optimized assortments align with company strategies such as protecting private label items and image items. They can also run multiple scenarios at once and compare results to identity the best strategy to meet their objectives.

Image Item Analysis
Enhance price image by analyzing item and basket-level data to determine key items by chain, store, or customer segment

Market Basket Profile Analysis
Understand which consumer purchasing behaviors drive larger, more profitable market baskets.

Zone Analysis
Analyze store-level demand and geo-demographic factors to create or reconfigure ad zones that improve volume and profit potential

Create Optimized Assortments Using Integrated Assortment and Space Solutions

DemandTec Assortment & Space enables retailers to integrate assortment optimization with space optimization and planning in order to create granular, store-specific planograms. Space planning systems have traditionally only used historical sales data to help in making decisions about new shelf plans. The DemandTec solution includes capabilities to improve these complementary applications by providing them with better information and new insights. Used in conjunction with Assortment Optimization from DemandTec, these systems can now use more accurate, science-based SKU/store level sales forecasts that are also used in making pricing and promotions decisions. To streamline the process of executing assortment changes, DemandTec Assortment & Space also has direct interfaces with planogram software from IRI, Nielsen, and JDA Software to import current planograms, make changes, and easily export changes back to these systems in the appropriate planogram file format.

Plan and Execute More Effective Assortment Strategies with a Common Platform for Consumer-Centric Decisions

While many retailers have experienced a high ROI by deploying individual solutions for assortment, space, pricing, promotions, and loyalty marketing, when retailers integrate all of these solutions on a common optimization platform, the combined ROI can be far higher. With a common, predictive platform, retailers are able to better understand their customers and execute coordinated customer-centric marketing and merchandising based on a single set of data and a single demand forecast. For example:

• Integrated price and assortment solutions enable retailers to ensure price and assortment goals are aligned (e.g., good-better-best and CPI strategies) and make pricing and assortment decisions with full visibility into cannibalization and incrementality.
• Integrated promotion and assortment solutions enable retailers to better allocate secondary space and ensure adequate inventory for promotions.
• Integrated marketing and assortment solutions allow retailers to cluster stores based on customer segments, tailor local assortments based on key segments, and optimize shelf facings and secondary space based on segment shopping behavior.