Assortment Optimization is a powerful tool for retailers to increase profit and improve customer experience and loyalty. It combines cutting-edge machine learning techniques, an agile continuous improvement methodology, and flexible customization to accommodate unique business requirements. Like other related solutions, assortment optimization utilizes machine learning techniques and AI to find the optimal assortment for every SKU in each store location. However, assortment optimization offers other unique benefits.
AI-based systems do not always make better decisions than humans. Find out why, and how to make sure your system is getting the best of both worlds.
Man vs. Machine
When it comes to Assortment Optimization, AI (artificial intelligence) and machine learning play a key part behind the scenes. While a human perspective helps, there are two important factors that make AI very important: scale and automation. For example, a large retailer with 1,000 physical stores and 10,000 products has as many as 10 million assortment decisions to determine which stores should carry which SKUs, what quantities, and when. Even though a significant portion of product offering is chainwide, that still leaves a formidable number of micro-decisions to be made. This amount of decision-making for humans is inefficient and not very profitable.
Assortment optimization is a major focus area for retailers at the moment. Retailers need more accurate SKU rationalization, a better understanding of what to buy in the future, and localized assortments that drive sales. Getting this right is crucial in the market today. There are a few traditional ways that retailers plan out their assortments. They either 1) think through their assortment from a business process standpoint, 2) look at loyalty and shopper data to determine assortment, or 3) think of a brand-new method to determine assortment.
By Marsha Shapiro
Having been in technology for almost 30 years, I have the unique experience of watching my two daughters enter similar worlds today and seeing how much, if anything, has changed for women. My oldest daughter is currently in a post college training program for a major cloud infrastructure provider, where only six of the 19 participants are women. My foggy memory is that this has not changed dramatically since I attended a tech consulting program at the start of my career. This ratio is likely why my younger daughter, an engineering student, is being courted for a free weekend in Tahoe just to get her interested in applying for certain internships (the weekend is only for female engineers). So, what, if anything, is being done to encourage women to pursue technology careers today (and is it enough)?
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Phantom Inventory may sound like the latest Ghostbuster or Batman flick, but the truth is this is a real thing that is causing hundreds of retailers to lose profits every day over misplaced merchandise.
RIS News Editor-in-Chief Joe Skorupa Interviews 4R’s CEO Kevin Stadler NRF’s 2017 Big Show in New York.
4R invites retailers to register now for Rock & Roll Retail. Space is limited!
When: January 16, 2017 | 8:30 pm – Midnight
Where: Hard Rock Cafe | 1501 Broadway, NY, NY
4R invites retailers to meet with their team January 17-19, 2016, at booth 3481 to learn how the company uses science and technology to help retail chains maximize profit from their omnichannel inventory investment. 4R efficiently manages $45 billion annually in retailers’ revenue.
BERWYN, PA, Monday, January 18, 2016 – 4R Systems, Inc., a leading provider of advanced inventory and supply chain services that uses science and technology to help retail chains maximize profit from their omnichannel inventory investment, announced Seasonal Allocation 2.0 Solution is now in general availability.
Seasonal Allocation offers retailers a cloud-based suite of tools to manage the allocation of short seasonal products through their entire lifecycle, from initial pre-season allocation through to post-season analysis. Seasonal Allocation clients can define and configure seasons, customize the demand profile for each SKU, manage initial and weekly store allocations, and review season performance during and after the season, all via a web-based graphical user interface. The Seasonal Allocation forecasting engine blends multiple components in different weights during the season to maximize accuracy. It then applies a proprietary optimization algorithm to produce allocations that balance the risk of stock outs against the cost of stranded inventory at each week of the season.
Kevin Stadler, 4R’s President & CEO, said, “Our Seasonal Allocation 2.0 Solution for retailers brings a new level of simplicity and accuracy in the supply chain. Retailers using our Seasonal Allocation Solution will see higher levels of both revenue and profit in their fashion and short seasonal products.”
4R offered Seasonal Allocation to a limited group of retail clients in 2015. After verified profit improvements in each case, the company is offering the solution to any retailer challenged to maximize profit opportunity from seasonal and fashion inventory.
Seasonal Allocation Solution 2.0 delivers four key advantages over traditional retail allocation solutions:
- The web interface provides tools to assign seasonality profiles at any level of the SKU hierarchy, using historical profiles or creating new ones, to best model expected demand.
- The forecasting engine blends multiple components in different weights during the season to maximize accuracy.
- The store allocations are calculated to maximize the profit of each item, including support for case packs and prepacks.
- The solution is cloud based, minimizing the initial investment and providing a return-on-investment in months, not years.
Retailers can learn more about 4R’s Seasonal Allocation at the NRF’s Big Show, January 17-19, 2016, at booth 3481. Qualified retailers can obtain a free NRF Expo pass by visiting http://4rsystems.com/nrf/, courtesy of 4R Systems.
Stadler added, “No other solution on the market today can match the ROI of our seasonal allocation solution.”