DemandTec

Assortment Optimization

Create Localized Assortments that Boost Sales and Delight Shoppers

• Base assortment decisions on a quantitative understanding of incrementality and transferable demand
• Optimize assortments to achieve sales, profit, and space productivity goals
• Increase merchant productivity with a retailer-friendly design

Many retailers want to tailor their assortments because they recognize that localized offerings provide differentiation, increase basket size, and increase customer loyalty—directly impacting the bottom line. However, some retailers continue to take the traditional ranking report approach to creating assortments, where they simply rank all the items in a category by sales, and replace items from the bottom up. While this approach is easy to execute, it often produces assortments with too little variety and too much duplication. The result is diluted sales across similar items, no improvement in store traffic, and underwhelmed customers.

Today, leading retailers can take a more sophisticated approach to efficient assortment planning by using DemandTec’s Assortment Optimization software service. This offering helps retailers determine which items should be stocked, by store or store cluster, based on the customers that shop at each store, the competitive environment, and a quantified understanding of whether each item in a category is merely duplicative or truly provides variety and adds incremental sales to the category. Assortment Optimization can help retailers with increasing variety in their assortments, SKU rationalization, assortment localization, and tactical efforts such as making one-in-one out assortment decisions.

Base Assortment Decisions on a Quantitative Understanding of Incrementality and Transferable Demand

Because consumer products manufacturers are constantly bringing out new line extensions and retailers are continually adding new private label items, retailers often end up with cluttered, over-SKU’d categories with items that don’t actually grow the category. Assortment Optimization’s approach to SKU rationalization incorporates 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, and transferable demand, which is the degree to which sales volume shifts to similar items or leaves the store when one item is delisted. Assortment Optimization develops consumer decision trees to identify the relative importance of product attributes and help determine which items are most substitutable.  Assortment Optimization can also incorporate market, loyalty card, planogram, and cost data into the optimization process. With Assortment Optimization, merchants can receive a set of specific recommendations for assortment changes, and a highly accurate forecast of how the addition or removal of each item will impact category sales.

Optimize Assortments to Achieve Sales, Profit, and Space Productivity Goals

Assortment Optimization leverages the most advanced Consumer Demand Management science in the industry to enable retailers to optimize assortments based on sales, profit, space productivity, and Gross Margin Return on Inventory Investment (GMROII) goals. Retailers can choose to generate these assortments by store, store cluster, or section, and view recommended facings. Merchants 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 perform “what if” analysis by running multiple scenarios and comparing results to identity the best strategy to meet their objectives.

Increase Merchant Productivity with a Retailer-Friendly Design

Assortment Optimization features automated processes to address the kinds of assortment challenges merchants face every day. Assortment Optimization includes wizards that can walk merchants step-by-step though common scenarios such as performing straight optimizations, increasing or decreasing SKU count and space, and making one-in-one-out changes to assortments. Merchants also have access to an extensive report library to provide a complete understanding of how assortment changes affect their business. To streamline the process of executing changes to an assortment, Assortment Optimization has direct interfaces with planogram software from companies such as IRI, Nielsen, and JDA Software to import current planograms, make changes, and easily export changes back to planogram files.

Built Upon a Proven Solution Used by More than 1,000 Professionals in 100 Categories

DemandTec’s Assortment Optimization software service is built upon technology derived from Cannondale Associates’ Rich MixTM, a proven assortment solution that has been used by over 1,000 consumer products professionals in collaboration with their retail customers in over 100 categories. This industry-leading solution has been continually developed and improved with over a decade of guidance from leading consumer products manufacturers, including seven of the top ten consumer products companies in Cannondale Associates’ PoweRanking® Survey. The software service now available to retailers, DemandTec’s Assortment Optimization, incorporates the industry-leading science of both companies, as well as DemandTec’s expertise in working with some of the world’s most successful retailers.

Get Started Today

Are you ready to optimize your assortments? Take the next step. For more information, call 1-888-676-3626 or request information online.