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11/21/2019

Deck the Aisles: Achieving Grocery Assortment Agility

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The holidays are an opportune time for retailers to double down on what’s working while also introducing new initiatives. While the tactics from year to year might change, and the amount of time between Thanksgiving and Christmas fluctuates, the holiday season provides a regular, calendar-based routine for retailers to evaluate what strategic adjustments they’ll make.

For grocery retailers specifically, this yearly shopping season brings somewhat predictable assortment changes – they know they’ll need to adjust shelf space to accommodate items like cranberry sauce, green beans, hot chocolate, desserts, and seasonal versions of pantry staples. These adjustments are necessary to meet consumer demand for holiday meals, but the category modifications have an obvious impact on other mainstay products.

So, how should a grocery retailer balance the dynamics of holiday product assortment with the need to drive and sustain growth across categories? By adopting new agile methodologies that drive perpetual assortment rationalization year-round.

Traditional calendar resets are not inherently optimized

Grocery category resets can take 30 weeks or longer to complete, but the way an individual customer thinks and shops today will look different four to five months from now. Category resets take place once or twice a year because it has traditionally been difficult to predict what an assortment will do in one store compared to another. The challenge is that retailers must make assortment decisions for every category, at the customer level, for each location, across the enterprise. But if a retailer has made only that many assortment changes, they’ve only effectively addressed the customer twice this year – and shoppers change daily.

When a retailer is beholden to the calendar for grocery category changes, true optimization feels out of reach – there’s not enough time or human brain power to think through eliminating items that customers aren’t excited about to open up space for other innovative products.

AI empowers retailers to make agile assortment decisions

To fix this, retailers must make assortment decisions based on real-time customer insights. But they can’t do that with traditional evaluations and manual processes. This is where artificial intelligence comes into play, identifying fundamental consumer changes in a category, in the market, or in other product innovation, and prompting specific changes to be made as soon as they are needed.

When making assortment decisions using AI-enabled insights, retailers are empowered to move away from traditional calendar-reset management, and instead, drive accurate and timely “agile” assortment decisions. Looking at shopping behaviors across sales, basket and loyalty data, AI learns the nuanced relationships between product purchases, whether as a complement to another product, or even as a substitute.

That data is used to drive assortment decisions, helping retailers to understand the motivations, priorities and needs of its customers. AI can analyze product performance from the customer perspective, knowing which products are most important, irrespective of sales performance. A product might be deemed a “slow mover” in a category, but if that item disappeared from the shelf, the whole basket might be lost.

AI can understand these dynamics. And by better understanding customer segments at the category and store level, retailers will see improved performance of the category. The technology creates a continuous feedback loop to evaluate customer response, empowering retailers to evaluate new item introductions and delight changing consumer tastes.

When January comes and grocery shelves are cleared of any trace of Christmas cheer, retailers can confidently and perpetually optimize their categories for any changing customer need – whether it’s another holiday or a hot new trend – by leveraging AI. The advanced, timely insights make it possible for grocers to make accurate and agile assortment decisions, and successful retailers will use it to make adjustments that align with customer demand. That’s the key to winning not only the season, but the hearts and minds of the shopper.

Kevin Sterneckert, CMO, Symphony RetailAI, has more than 25 years of comprehensive industry experience, bringing a keen understanding of retail, manufacturing and logistics challenges. Kevin’s industry experience includes serving as chief information officer, supply chain executive, development of innovative technology solutions, inventor, and store operations development for both physical and digital retail.