Shelf Real Estate & Data Analytics

In the whole gamut of retail supply chain, there is only one moment of truth! The time when the customer looks at the product on the shelf and decides to buy it. As they say, its all prep work till register rings. Business wise, shelf is the only real estate property for any retailer. A place where the retailer has that unique opportunity to persuade the buyer to buy the product.
So how does a retailer do it? Traditionally couple of thumb rules has been practiced in the industry like putting the most profitable items at the eye level shelves and pushing others to the bottom. However with astronomical rise in the number of items and increase in competition among the brands becoming fierce, it is the need of the hour to assign right shelf spec to the right set of products so as to meet the underlying business objectives. These objectives can be as varied as minimizing the cost, Maximizing the sales, Increasing the assortment or a combination thereof. The skill is in arriving at that right number of items and variety to be placed on the shelves to meet these rules.

Now it may all sound very simple but the complexity of the problem lies in numbers. Considering the number of items that a category manager has to carry, the possible combinations of facings of the items that can be placed on the shelves is mind bogglingly high to be analyzed by a human brain. This is where data analytics can help to process the information at incredible speeds to arrive at the desired solution. This is a perfect opportunity area for human – computer participation where the computer’s data analytical skills supplemented with category manager’s business know-how can do wonders!

A Problem of Plenty

I’m sure many of you would have felt that with too many television channels around, it has become really difficult to focus and follow your favorites? Similarly with the explosion of content on World Wide Web, it has become far more cumbersome to zero – in on the information you desire. Guess what, there is a similar trend taking place in the product assortment at the store.

Per latest consumer research performed in UK by Consumer Marketing Capitalism, more and more people are complaining about having too many variants of the same brand leading to increased confusion and at times frustration in consumers’ mind.

If these findings are to be believed, it is probably detrimental for the brand managers to have myriad number of variants of the same brand on the shelf. Probably each brand has a tipping point beyond which the extra number of sub-Brands cannibalizes on their cousins anyway. What is significant is for the Brand managers to identify the tipping point and single out those sub brands who together supplement the sales rather than eating into each others share.

Similarly the category managers at the Retail end have an equally important role to play. Considering the proximity to POS data, they should pick out the significant few and get rid of problematic plenty. This will lead to increased profit as well as improved customer satisfaction.