CASE STUDY

Assortment Planning and Process Improvement Deliver a 7-10% Increase in Sales and a 5-10% Gain in Gross Margin for a Leading Retail Chain

Sep 23, 2016

Business Challenge

Challenges in maximizing profits.

A leading retail chain, with a variety of stores in North America, wanted to evaluate the ways to improve its profit levels and wanted us to conduct an analysis of their merchandise assortment planning.

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Situation

Issues with determining the right merchandise assortment based on performance.

The client wanted to analyze product performance to determine which products to keep/add/drop, finalize master assortment, identify key items to be in focus, and help set up the process for on-going assortment planning needs.

Solution/Approach

Devised a mechanism to determine the most profitable assortment plan.

We analyzed existing assortment and its performance, gathered and analyzed customer behavior and perception insights, evaluated the impact of listing or delisting of items, and analyzed switching frequency and demand transfer probability. We also provided insights to determine which items should be stocked, substituted, and removed to maximize sales or profit.

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Impact

An improved process for assortment planning and increased sales and gross margin gains.

The client received an improved process for assortment planning. They enhanced their simulation capability for assortment scenarios and the impact of change. This helped them achieve a reduction in wastage of unused SKUs and improving customer satisfaction and return on investment across months. The overall outcome was a 7-10% increase in sales and a 5-10% gain in gross margin.

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