Overview
Managing the width and depth of an assortment is fundamental to any retailer whether they operate stores, ecommerce or wholesale. All too often, assortments are bought too wide, resulting in a long tail of under-performing products. To counter this, Toolio provides the assortment rationalization functionality to address the width and depth challenges in building an assortment.
Creating a Rationalization Scenario
Toolio allows users to create multiple rationalizations scenarios. This can support viewing the assortment width and depth from different perspectives. To create a scenario for an assortment, select the down arrows on the specified assortment and click on the create button.
Each scenario can be partitioned by attributes important to the width and depth analysis. By default, any product filters used in the creation of the assortment will be included in the partitions, but additional partitioning can be selected.
Rationalization can be done in total or by cluster. To seed an assortment a cluster must be selected.
A Source timeframe is required, this provides the basis for the productivity analysis conducted as part of the hindsight process.
Click Create to run the hindsight analysis
Hindsight Analysis
The first step in rationalizing the width and depth of an assortment is to hindsight the productivity of the existing assortment to evaluate the productivity of the assortment and determine the curve from the top performing down to the bottom performing product, through cleansing, the system will eliminate products that did not contribute to drive a more accurate productivity calculation. Users can override the system cleansing at any point by including or excluding specific choices.
As changes are saved, the rationalization of the new assortment is updated. An aggregation of the data cleansing as well as the before and after ROS (Rate of Sale) can be reviewed to understand the impact of cleansing out the tail of the assortment.
Width and depth rationalization
Based on the cleansed marginal return curve, Toolio will recommend the ideal width and depth (productivity) of the assortment for each type of product. This is done by applying the target budget from merchandise planning to the cleansed marginal return curve.
Users can create various scenarios, for instance modeling the mix of price points or colors or fabrics to determine the ideal mix, width and depth of the assortment.
By manipulating the slider, users can adjust the curve to expand the width of the assortment and reduce the productivity per choice or vice versa.
Seeding an Assortment
After analyzing the assortment, users will have the opportunity to seed a new assortment directly from the rationalization. By including clustering, the seeded assortment will create an assortment wedge with the placeholder products ranked with the top product going to all clusters and down through the remainder of the clusters.
As part of the seeding, the cluster group selected will be applied to each new placeholder and the appropriate clusters selected for the assortment wedge. Defaults can also be applied to allow the seeded placeholders to automatically calculate a forecast. Average Ticket, Cost and Retail prices are populated from the financial plan on which the rationalization was based.