Rocket Science Retailing and the
Research Opportunities
it Creates for Us

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Agenda

Research collaborators

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State of retail supply chain management today

Two knit tops appeared well bought at the chain style color levelÖ

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And SKU-door level analysis reveals huge lost margin

Whatís causing these problems?

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Whatís causing these problems?

Albert Heijn example Ė store sales vs customer entrances reveals problems

Retailers have data that can help, but donít use it

Retailers have data that can help, but donít use it

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The payoff from fixing this can be huge

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

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Merchandise Depth Test

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Testing practice

Typical testing process

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New testing process uses store clustering to find representative test stores

Test store selection problem

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Performance of the new method for four retailers

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Forecast Committee Results

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The Initial Buy Minimizes the Cost of Stockouts and Closeouts

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Application of this approach to one style-color

Product Lifecycle Planning

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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%

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Research Opportunities in Retailing

Real demand differs from textbook image

Research Opportunities in Retailing