Rocket Science Retailing and the
Research Opportunities
it Creates for Us

Slide 2

Agenda

Research collaborators

Slide 5

State of retail supply chain management today

Two knit tops appeared well bought at the chain style color level  …

Slide 8

And SKU-door level analysis reveals huge lost margin

What’s causing these problems?

Slide 11

What’s causing these problems?

Albert Heijn example – store sales vs customer entrances reveals problems

Retailers have data that can help, but don’t use it

Retailers have data that can help, but don’t use it

Slide 16

The payoff from fixing this can be huge

10% higher in stock leading to 10% more sales doubles profit

Slide 19

Slide 20

Slide 21

Merchandise Depth Test

Slide 23

Testing practice

Typical testing process

Slide 26

New testing process uses store clustering to find representative test stores

Test store selection problem

Slide 29

 Performance of the new method for four retailers

Slide 31

Slide 32

Slide 33

Slide 34

Forecast Committee Results

Slide 36

The Initial Buy Minimizes the Cost of Stockouts and Closeouts

Slide 38

Slide 39

Slide 40

Slide 41

Slide 42

Slide 43

Slide 44

Slide 45

Application of this approach to one style-color

Product Lifecycle Planning

Slide 48

Slide 49

On Hand inventory prior to 4R

Lost sales prior to 4R

Lost sales for 4R SKUs decreased from 6.6% to 2.2%

Weeks of supply relative to Control SKUs decreased 7%

Slide 54

Slide 55

Research Opportunities in Retailing

Real demand differs from textbook image

Research Opportunities in Retailing