Optimize
Trends
Almost all retailers are moving to localized assortments in order to optimize
the product mix to the type of consumers that shop that store. They want help
from CP companies in advising them and recommending assortments.
Retailers are willing to allow CP firms to use trade funds to sponsor targeted
offers via mail and email to specific segments of consumers, without sharing
identifying information. Leading CPs ought to be ready to create customized
offers on behalf of the retailers.
There is a continuing focus on price optimization and for the first time, retailers
are beginning to take price recommendations from CP firms with a joint demand-shaping
strategy.
Analysis
Analytics associated with investment in optimization include:
- Sales per Linear Foot, Lift vs. Control Group, ROI for Additional Facings,
Recommended Product Additions
- Response Rate, Long-Term Lift, Promotion Lift, Cannibalization, Marketing
ROIC, ROMI
- Clickstream, Price Adjustments and Recommendations, Category and Brand
Effects, Simulation
Benefits
Benefits attributable to optimization may include:
- Increasing volume for the CP and profit and volume for the retailer
- Increasing sales per square foot and turns, decreasing attrition and increasing
loyalty
- Improving success rates for new item introductions, more brand loyalty
- Increasing basket size, increasing frequency of trips, higher ROMI on trade
funds
- Raising margins for the retailer resulting in more frequent orders and
fewer charge-backs
