Retail Insights:

Retail Software is Key to Fine-Tuning

Range Assortment

By: Peter Davison, Business Consultant, Galleria RTS

Retail Insights
Retail Software is Key to Fine-Tuning Range Assortment

The Need
Is the range assortment in a supermarket based upon a mathematical calculation? Should it
be used as part of an individual retailer’s strategy? Or, should it be applied by the retailer to
provide such an assortment so that each store offers all products to serve the need of every
individual customer who comes in to shop? Range assortment is likely a combination of all of
these things. But how much analysis work needs to go into deciding what range assortment is
right for each store size, or for that matter, each store type?

It’s also probable that most retailers would need an army of people to initially establish which
stores are different from each other, determine how those differences apply by product
categories and decide if range assortments should differ by store banner.

Research indicates that most customers want a shopping experience that is based on several
factors, including:

Ease of navigating the aisles

Store ambience
Assortment fulfillment
Price competitiveness
Full availability
Fresh quality

In short, the whole shopping experience has

to exceed each customer’s expectations. And
although it’s not unusual for supermarket
retailers to strive for all of these attributes,
unfortunately only a small number have the
time and expertise available to achieve them
all.

Galleria Retail Technology Solutions Ltd. 2

UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Retail Insights
Retail Software is Key to Fine-Tuning Range Assortment

But the stakes are high in fulfilling all the store attributes expected by customers, because only meeting
one or two of these criteria would not be sufficient enough for a retailer to survive. For example, being the
most competitive retailer on pricing alone will not result in customer loyalty. Likewise, having the widest
assortment available wouldn’t be enough to endure in the marketplace if there is no competitive edge.

Even with a combination of good assortment coupled with a

competitive shopping basket, if the store is consistently out
of stock it would spell disaster for the retailer.
In the past, stores have
usually been clustered Retailers must not only attract new customers to their

using a top-down stores, but aim to increase the basket spend of their existing
customer base to remain truly competitive. Only through
approach which has computer optimization can retailers go through the millions
resulted in the same size of iterations required to arrive at a productive assortment
that is unique for all stores. To help retailers meet all of
or type of store receiving these objectives, there are a number of software solutions
exactly the same on the market that can automate the process of assortment

assortment and space planning and space optimization on a separate basis, and
recently the introduction of new software that combines the
automation process of both simultaneously.

The Assortment Planning Process

Determining what product assortments should go in which stores is the first step in the planning process. In
the past, stores have usually been clustered using a top-down approach – either by banner or linear footage
– which has resulted in the same size or type of store receiving exactly the same assortment and space.
Unfortunately, this approach ignores the variation in customer purchasing patterns inherent within each
store.

There are other factors to consider in determining an assortment, including ‘Rest of Market’ data. Despite the
fact that it’s only a collective database of the other retailers’ sales history, it should be considered because
it will provide a retailer the ability to recognize shortfalls in their own assortment. This information, coupled
with live customer research, will enable retailers to develop an assortment strategy for their future business.

Galleria Retail Technology Solutions Ltd. 3

UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Retail Insights
Retail Software is Key to Fine-Tuning Range Assortment

Also, buying decisions should be considered as part of the assortment decision-making process. Deciding an
assortment is not just about volume unit sales. Value and overall profitability has to be considered, which
certainly opens up a whole new scenario of having the right balanced retail pricing and mix of promotional
category strategies.

Lastly, retailers need to determine how much of the category assortment space is determined from
promotional sales, or how much of the promotional sales are from off-shelf versus on-shelf.
These are all factors that need to be addressed by the retailer’s software before calculating not just
assortment, but adequate space allocation.

Balancing Internal Objectives

A buyer will always want to achieve maximum assortment to
cater to innovation and growth markets. However, in achieving
the category strategy, buyers will ultimately aim for maximum
income. In contrast, a space planner will want to ensure the
assortment fits the space in a productive and aesthetic way
to increase the sales-per-square-foot, thus mitigating ever-
increasing operational costs and ensuring that the assortment
can achieve maximum sales with the minimum inventory.

The other key stakeholder involved in the range and space process, the supply chain manager, needs to be fully
involved at each stage to ensure the right quantity of product is supplied to the right stores. This is where the
software selected by the retailer plays a major role in the process: optimizing space and assortment, based on
rules set by the user, which ensures the correct amount of case fill is achieved while maintaining the required
level of days’ supply in inventory.

The end result should be the development of a productive category assortment and space plan that allows all
stakeholders to measure the effectiveness of the assortment they select versus their budget, and ultimately
against “Rest of Market” data, to ensure the retailer is getting their rightful slice of all sales opportunities.

Software selected by the retailer plays a major role

in the process: optimizing space and assortment

Galleria Retail Technology Solutions Ltd. 4

UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Retail Insights
Retail Software is Key to Fine-Tuning Range Assortment

Case Study
In the current competitive environment, only retailers
who recognize the need to innovate and manage their
assortment review process will succeed. To reach this
goal, retail technology is the key. Progressive retailers
who currently deploy assortment and space planning
optimization technology are enjoying the long-term
benefits of customer retention and organic growth.

One such retailer is M.Video, a chain of consumer

electronics stores in Russia.

“With a wide variety of stores and a fast-changing

assortment, our goal is to provide our customers with
great value, the latest technology products, a superior
shopping experience and great service,” said Konstantin
Nechaev , the program director for M.Video. “With retail
software that assists us in range assortment, we can now
analyze demand patterns, draw conclusions and convert
them into particular actions in a very short period of
The With a wide variety
time. Armed with this insight, we’ve been able to tailor of stores and a fast-
the stores more closely to the customer requirements,
changing assortment,
ensuring that we carry more lines that are appropriate to
the needs of customers.” our goal is to provide
our customers with
great value, the latest
technology products,
a superior shopping
experience
Konstantin Nechaev
Programme Director
MVideo

Galleria Retail Technology Solutions Ltd. 5

UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Retail Insights
Retail Software is Key to Fine-Tuning Range Assortment

Founded in 1989 and operating from offices in Cheshire in the UK and

Chicago in the US, Galleria is the leading provider of retailer and vendor
category planning, automation, optimization solutions and consulting
services. With its comprehensive product suite, Galleria provides
customer focused solutions for clustering, automated assortment and
space optimization supported by detailed analytics and reporting tools
designed to meet the needs of retailers and CPG vendors. The solution
suite supports both bottom-up product level in addition to store,
department, zone and aisle optimization.

The net result is that Retailers and CPG vendors/manufacturers realize

significant benefits from adopting Galleria’s solutions and services.
Identifying target customer groups and presenting them with the best
possible assortment, in the right location and with accurate inventory
levels results in satisfied and loyal customers.

Galleria’s flexible approach means that solutions can be hosted by Galleria

and or operated as both work group and integrated solutions. In addition
to purchasing the solutions the consulting practice is on hand to either
augment current resources or work on specific projects as and when
required. Typical engagements involve the analysis and optimization
of store space, assortments and promotions based upon intelligent
forecasting and customer behavioral analysis.

Galleria currently works with many of the world’s leading retailers

including A&P, Coop Denmark, East of England Coop, Giant Eagle, Maxima,
M.Video, Morrisons, One Stop, Safeway, Tesco and Unilever. Galleria has a
number of strategic partnerships with: Nielsen, RGIS and ZBD and is also
an accredited Microsoft Certified Development Partner.

For more information about Galleria, visit www.galleria-rts.com

Galleria Retail Technology Solutions Ltd. 6

UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com