Assortment optimization for targeted customer marketing

A leading packaged foods brand

Our client had large-format, directly serviced stores, located on the outskirts of the cities they operated in. The client was not able to cater to a significant segment of customers based within the city limits.
Our client wanted to venture into small store “lite” category outlets that could cater to such customers within city limits
The client wanted to optimize the assortment mix including product bundles for its new stores and offer personalized and targeted customer engagement

15-20% increase in sales in the new stores within the first 6 months due to higher consumption of the assortment mix
1/4th of incremental sales in the stores delivered via customized product bundling of two product lines
An independent customer survey launched by the client validated brand-switch of in-store customers on account based on assortment mix and product bundling tactics

SGA worked closely with the client to come up with a methodology for clustering similar stores using a clustering technique
We created store clusters based on store profile differentiators such as geographic location, population density, premium shoppers (affluent localities), overall size of the store (class A/B/C), loyalty programs provided through retailer, assortment mix purchased in the past, servicing frequency, store layout, history of in-store promotions, retailer margins, assortment mix inventory trends, etc.
For each store cluster, we identified a benchmark store. We identified assortment mix gaps for all stores by comparing the assortment range available / sold to the benchmark store(s)
Additionally, we determined a must-have top selling SKU list within each category for each of the store clusters, using market-basket analysis (cross- product affinity analysis) that leveraged apriori algorithm
Based on our recommendations, clients’ sales teams were provided the revised must-have assortment for their outlets, as an essential ‘product line’ target during their beat plans