Assortment Optimization


One of the many challenges that retailers face on an ongoing basis lies in assessing the right balance of products to present to shoppers. Assortment optimization is how retailers can determine the optimum mix of items in a product category ( category management ) to display on their shelves. Armed with such data, companies can better strategize for maximum sales and revenue, and thereby achieve their profitability target goals.

The optimum assortment is one that attracts and creates repeat customers while at the same time produces the largest profits. By virtue of assortment optimization, guesswork is eliminated. The approach consists of using market data and consumer demographic data (big data), as well as other metrics, to determine the major factors that drive consumer purchasing decisions. The ensuing data empowers the retailer with the necessary information to confidently offer a mix of items that will meet the demand of a particular shopper segment.

Among the benefits of assortment optimization are increased profit margins, enhanced customer satisfaction with the right mix of products, optimized inventory investments, building of customer loyalty, and more. The technology plays a big role in allowing retailers to gain a substantial edge over the competition.

Assortment optimization makes use of three pivotal dimensions:

– Consumer decision trees (CDTs): a method that shows how, based on behaviors and influences, shoppers prioritize category items and products.

– Instrumentality curves: a science that allows retailers to examine how shoppers reacted to past changes in inventory, as well as how they will likely react to future changes.

– Optimization: a method by which to determine the steps necessary to reach a predetermined goal.

Until recently, retailers could only surmise, based on personal experience and competition analysis, the best assortment of items and products to place on their shelves. While this strategy may be enough to survive in less competitive markets, it is precarious at best in markets with higher levels of competition.


24 comments on “Assortment Optimization

  • Katherine Lucey says:

    Assortment optimization is an excellent tool that showcases products that are well-balanced to increase sales.

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  • In a world of finite shelf space making sure your best skus are given priority is a key component of maximizing sales

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  • Assortment Mix is important in ensuring the right products are distributed and in stock, you also need to look at the performance and ensure the top performers have the correct placement and mix.

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  • Consumer Decision Trees are incredibly useful when determining not only assortment, but merchandising strategy as well. They can help drive your planogram layout and flow to ensure the best shopper experience.

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  • Having the data, software and analytical abilities to do CDTs is huge in making sure enough have the right assortment. These are the types of things we can do for you at ToolBox Solutions.

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  • Using the right tools and reporting, Assortment Optimization can be a simple process with very quick wins for the Retailer.

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  • Assortment optimization is no longer a guesswork, but rather a result of scientific processing of big data based on Consumer decision trees and Instrumentality curves.

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  • If a shopper goes into the same store they’ve been going into for a while and getting the exact same product and the same brand the whole time, they go in one day to find that it isn’t on the shelf or the peg board or the wing rack anymore. The store has just lost a customer to their competition because they will go to another store to find what they are looking for and while they are there they will pick up everything else they need.

    Assortment is key, to keep customer loyalty. As long as the customer can find what they are looking for, they will keep coming back.

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  • Ian McClennan says:

    Assortment Optimization is vital to maximizing profits. A fantastic, efficient approach to making sure your product selection is working to your advantage.

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  • The correct product assortment is one area where retailers can get the best bang for the proverbial buck. The greater the turn for a product, the better potential for profitability.

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  • Don Edmonds says:

    Another excellent way to maximize profits and add value to our customers (through customer satisfaction) is using the best Assortment Optimization possible!

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  • I couldn’t agree more with these comments. An integrated assortment process will deliver enhanced capability to understand changing consumer needs, as well as the ability to more proactively influence a dynamic marketplace. The end result is better category management decisions, happier consumers and profitable growth for retailers and manufacturers.

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  • A poor assortment is a waste of time, effort, working capital and a drag on your bottom line. Regardless of whether there is room, poor performing items should be removed and space allocated to higher performing items

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  • Joe Catella says:

    CDT is key to understanding what consumers are looking for. In addition, assortment optimization is essential to success in today’s stiff competition, and making sure the right items are on shelf.

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  • I love seeing what the impact of optimizing your assortment can be. It can easily be hundreds to thousands of dollars per week per store.

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  • Assortment optimization ensures the right product is available to the customer. To the retailer, it ensures maximizing sales/profits.

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  • Maria Barbieto says:

    When you take a comprehensive approach to assortment analysis of every business, retailers will benefit on investing their dollars on product that will sell and reduce unnecessary markdowns.

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  • When you provide the right products consistently to your customers they will keep coming back. Assortment optimization tools are available from ToolBox to make this much easier to achieve.

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  • If don’t have the ability to perform a full assortment review, it’s always beneficial to ensure that your Planogram assortment is strong across the board. There’s been many instances top performing items are missed from smaller variations. Ask your merchandising team to run a planogram comparison report and you can quickly highlight any gaps and issue updates to capitalize on the opportunities!

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