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.
The holiday shopping season is right around the corner and for many retail owners, this can be a stressful time for many reasons. There are larger crowds, a need for extra staff, the general strain of the holiday hustle and bustle and the guessing game of how much extra inventory you’re going to need in your store to accommodate those crowds. [Read more…]
Learn how the company’s newest solution uses prescriptive analytics for profit-optimal inventory assortment. 4R will present its solution at NRF’s Annual Expo, Retail’s Big Show; Offers Industry’s Only Profit Guarantee.
4R invites retailers to meet with their team January 15-17, 2017, at booth 1315 to learn how the company’s newest solution uses prescriptive analytics for profit-optimal inventory assortment.
BERWYN, PA, January 11, 2017 – 4R Systems, Inc., a leading provider of advanced omni retail inventory and supply chain solutions, announced its next generation assortment optimization solution for omni retail chains. The company uses science and technology to help retail chains maximize profit from their omni retail inventory investment.
Many retailers use predictive analytics to determine assortment across their retail chain. 4R’s solution uses prescriptive analytics. It uses sophisticated demand decomposition logic based on true demand, not just past sales results. This equips a retailer to identify winning SKUs, prevent negative effects such as cannibalism and halo, as well as correct for stockouts. 4R’s prescriptive analytics move beyond showing what happened in the past, and beyond predicting future inventory activity. The solution accurately prescribes what, when, and where each SKU should be in the retail chain. 4R manages over $45 billion in retailers’ revenue and creates over 8 billion reorder points annually.
Mark Garland, 4R’s Executive Vice President Sales, Marketing & Solutions said, “4R’s assortment optimization solution is a retail game changer. Retailers have been pressured to pay exorbitant amounts of money for enterprise solutions with no assurance of increased profit—until now. 4R offers an Inventory Productivity Analysis. It shows in advance how much profit increase the retailer can expect. We always hit our target, or exceed it.”
“4R’s assortment optimization gives retailers the results they want,” added Frank Palazzo, Senior Product Manager for 4R. “Of course this solution solves inventory management challenges, but it doesn’t stop there. The end goal is to maximize profit for every SKU in a retail chain, so we crafted a solution that removes the guesswork and delivers more profit.”
The solution helps retailers increase profit in these ways:
- It identifies winning SKUs, even those not offered in current assortments.
- It quantifies the benefits of key merchandising decisions, increasing localization and reducing SKU proliferation. Clients can see in advance the additional profit from increasing the assortment localization and select the level appropriate to its business.
- Visualization tools enable clients to control assortment size based on revenue, profit, SKU count, space goals or other business constraints.
- It eliminates the need for third party measurement tools by automatically tracking rollout and performance of assortment changes during a pilot test as well as full deployment phases.
- It continually monitors category performance to trigger re-assortment if performance lags as well as on a scheduled basis.
- When combined with 4R replenishment, 4R’s assortment optimization requires no additional data feeds and can calculate the impact of assortment changes on inventory cost.
Like all solutions offered by 4R, assortment optimization is cloud based, requires no capital investment, no additional staff, and minimal IT resources. Deployment and ROI can be realized in a few months, not years!
Retailers can learn more about 4R’s Next Generation Assortment Optimization Solution for Retailers at the NRF’s Big Show, January 15-17, 2017, at booth 1315. Qualified retailers can obtain a free NRF Expo pass by visiting https://4rsystems.com/nrf/, courtesy of 4R Systems.
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 https://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.”
4R invites retailers to meet with their team January 17-19, 2016, at booth 3481 to learn how the company’s newest solution optimizes inventory assortment to increase profit.
BERWYN, PA, Sunday, January 17, 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 an assortment optimization solution designed to increase profit.
4R’s solution positions retailers to model demand for products in a category by their attributes and find the best set of products to maximize sales or profit. AO also helps determine the optimal number of products for a retailer’s omnichannel inventory.
Source: Nucleus Research
THE BOTTOM LINE
The Vitamin Shoppe deployed a solution from 4R Systems Inc. to improve replenishment and inventory performance for both its in-store and online business. Nucleus found that 4R’s Store and DC Replenishment Optimized Inventory Service allowed the specialty retailer to take profit margins into account in determining inventory replenishment.
- Increased in-stock availability of store product from 90 to 96 percent
- Upped inventory turns from 30 percent.
- Cut back order rates from 10 to 4 percent
- Achieved payback under the target date of two years
4R, an event sponsor, invites retailers to meet with their team 10-11 March 2015, Olympia London, at Stand 510; 4R CEO Stadler to deliver sponsor speech.
BERWYN, PA, USA, Monday, March 9, 2015 – 4R Systems, Inc., a leading provider of advanced inventory and supply chain services that helps retailers increase profits by optimising their inventory and related supply chain decisions, announced its sponsorship of RBTE, Retail Business Technology Expo. 4R will be sharing its Profit Optimised Inventory solution for fashion and short season multichannel retail inventory. Attendees will learn how the company enables retailers to profit optimise their inventory, accurately matching supply with demand.
4R’s CEO Kevin Stadler, one of RBTE’s featured speakers, will present, “Driving Profit By Reducing Risk Within Your Multichannel Stock Management Strategy.” Retailers responsible for buying and merchandising or supply chain and logistics can hear Stadler in Theatre B on Wednesday, March 11th 2015, 14:30 – 15:00. Stadler brings over 25 years’ experience in retail technology, product strategy, sales and software design.