How to use retail assortment planning software to optimize store revenue
Small shop owners can greatly improve efficiency of their store by using retail assortment planning software of some sort. But before we dive into how exactly these applications can help a small retail outlet, let's first look at the problem.
Figure 1. Many items on retail shelves
| The retail assortment planning problem |
Many stores today face the same issue. They order inventory based on what the owners and managers think will sell only to later be served with the cold shower of reality. Most often than not, it turns out that they can't sell what they bought leaving the business with great loss. To summarize, they spent money on things which they can not turn over and on top of that, they have storage costs for items nobody wants.
While that is an immediate side-effect of poor retail assortment planning, there is one more concerning aspect of getting this wrong which is not obvious immediately. See, customers come and go to and from your store. And what do you think happens when a customer enters the store which doesn't have anything they want or need few times in a row? Yeah, you guessed it right! They don't come back ever again. And even worse, they start spreading negative word-of-mouth about your business. Sounds like something you wouldn't ever want, right?
As if this was not enough, there is one more issue tied to poor retail assortment planning. However, this one is on a completely different side of the problem. For example, try to imagine that you have a whole bunch of customers coming into your shop. And most of them are looking for items which you had but, unfortunately for you, have sold out. What happens next? They just leave the store leaving you with lost revenue. As you can see, inefficient retail assortment planning can hurt your business from both sides.
| Solution may be easier than you think |
As you are already guessing by this point or, even worse, have probably learnt it the hard way in practice, when you're stocking up your store with merchandise, you should order just enough that's needed. Just enough to not be left with items you can't sell and just enough to not ever having to say “sold out” to a customer. And on top of that, you want to completely stop ordering the likes of items that don't go well while ordering more of items similar to the ones that sell like crazy. But how can a shop owner possibly know all of that information and get it right?
The answer is that you already have that information and have already obtained it through sales. It's just that it's too much data for a human brain to effectively process. This is exactly where retail assortment planning software like Shoptimality can help you.
| Assortment planning with artificial intelligence |
We at Shoptimality have been conducting a research into applying modern artificial intelligence technology in the retail sector. And amongst all the problems we were able to solve in retail successfully, assortment planning is one we are especially proud of. So how do we do it?
We take information about your sales, items and customers and feed our AI models with it. After successful AI training, Shoptimality can effectively solve many problems for your retail business and give you very valuable insights.
For example, our Customer Demand Prediction feature can predict uprises and downfalls in demand for each particular product in your inventory over the upcoming 30 days in the future. And not only that, but it can also predict exact change in demand in both percentage and item count. What's important to say is that our AI predicts this based on your customers' behavior. And customers know better what they want themselves than the store owner does, right?
Figure 2. Shoptimality Customer Demand Prediction
Fuelled with this information, you are immediately made aware of how much of a particular item you need to stock-up with to meet exact customer demand. And what's even more important, demand predictions also reveal for which products there will even be a demand in the future and for which there will be none. You can use this information to change the offerings in your store so you always meet the demand and keep your customers happy. Now what would happen if a customer comes into the store multiple times which always has brand new items which are, by coincidence, just what they need? Yeah, you guessed it right! They would be coming back again and again.
And to cover the other end of the assortment planning problem, you can use the Shoptimality Stockouts Prediction feature. This joins the data from your inventory with the demand prediction generated by our AI to notify you on time when a particular item will go out of stock. And how much of a deficit there will be for that item as well, completely based on predicted demand. This way, you can avoid having to say “sold out” to you customers in store.
Figure 3. Shoptimality Stockouts Prediction
| Seamless integration with the sales flow |
The best thing about it is that Shoptimality retail assortment planning software is not a stand-alone application. It is an end-to-end retail management solution which enables you to run your retail shop from all aspects. We provide you with a hardware agnostic point of sale software. To run it, you only need an Android tablet of any make. It integrates with credit card terminals, barcode scanners, receipt printers and all other retail peripherals.
In addition, we also provide you with cloud retail analytics so you can check how any aspect of your store is performing at any time, from anywhere. And there's a lot more. This way, you only need to concentrate on your business without any distractions. And, of course, to act on actionable insights generated by our retail artificial intelligence technology.
Figure 4. Shoptimality Cloud Retail Analytics