January 23, 2023

Assortment & space management for an electronics retailer

Analytical-driven processes for assortment and space management

Assortment & space management for an electronics retailer

At a glance

Challenge

An electronics retailer needed to upgrade its assortment and space management processes, which were manually and empirically defined for each product category. The opportunity to improve data analysis, underlying processes, and monitoring practices was identified despite increasing business complexity and shorter product lifecycles.

Solution

To succeed, stores were clustered based on sales profiles and predicted capabilities for new stores based on exogenous factors like customer income. Assortment forecasting considered product attributes and their sales potential, while space allocation was optimized based on category return and space elasticity.

Results

A tailored Decision Support System with monitoring dashboards delivered leaner, analytical-driven processes for assortment and space management, improving reliability by reducing dependency on planners' preferences.

Challenge

An electronics retailer needed to upgrade its assortment and space management processes, which were manually and empirically defined for each product category. The opportunity to improve data analysis, underlying processes, and monitoring practices was identified despite increasing business complexity and shorter product lifecycles.

Approach

Solution

To succeed, stores were clustered based on sales profiles and predicted capabilities for new stores based on exogenous factors like customer income. Assortment forecasting considered product attributes and their sales potential, while space allocation was optimized based on category return and space elasticity.

Results

A tailored Decision Support System with monitoring dashboards delivered leaner, analytical-driven processes for assortment and space management, improving reliability by reducing dependency on planners' preferences.

Our
AI-generated
summary

Our AI-generated summary

Our AI-generated summary

An electronics retailer was in need of assortment and space management upgrades, as the processes were defined manually and empirically for each category of products.

In spite of the ever-increasing business complexity and of the shorter products’ lifecycles, we found an opportunity to improve data analysis processes, underlying processes, and monitoring practices.

In order to succeed, we clustered stores based on their sales profile and predicted capabilities for new stores based on exogenous characteristics (e.g., income of potential customers). Regarding assortment, the forecast of the products’ sales potential was based on their attributes’ value (i.e., estimating, for example, the utility of each inch in a TV), and final product selection took into account sales potential and cannibalization effects.

As for space allocation, we based our strategy on an optimization of categories return, considering space elasticity.

By creating a tailored Decision Support System with monitoring dashboards, we successfully delivered new, leaner, and analytical-driven processes for assortment and space management.

Moreover, the overall reliability of the process was enhanced because it became less dependent on the planners preferences.

Our AI-generated summary

Our AI-generated summary

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