What can Demand Transfer and how can it help my business?
With the proliferation of products, retailers and suppliers need to better understand the impact of introducing or removing products and groups of products from the assortment, and how that may or may not impact sales. Looking at historical and market data in isolation will not help in determining if new lines added will actually generate incremental sales or simply cannibalize sales from other products. Conversely, if we remove a product, how much of the sales generated by that product will transfer to other products?
From soup to nuts, retailers and suppliers alike are working hard to avoid lost sales but predicting consumer preference can be a challenge.
Predicting accurate demand transfer has been the stretch goal for suppliers and retailers since the genesis of the category management process. The arrival of a robust methodology means both the housing and processing of “big data” in the form of line by line basket level transactional information, not to mention sophisticated analytics to establish those artifacts, which encapsulate transference in demand and product behavior.
In the past, many systems in this area have left the end user having to estimate crude forecasts for incremental sales, or negative transference in the form of sales cannibalization, which has led to increased subjective analysis in preference to objective based decision making based upon proven science. The advent of cloud services has facilitated the enormous amounts of data necessary to perform accurate and meaningful analysis, a technology which has been harnessed by Galleria in laminating “big data” with scientific principles to deliver something that is starting to cause a paradigm shift in the industry.
- Brings together the disciplines of detailed space aware assortment planning
- Results in a more refined and customer focused assortment
- Provides the ability to perform what-if analysis considering transferability
- Provides an operational result that can be exploited every day in preference to one off consulting exercises
Demand Signal Analytics - DSA
Actionable insights for demand driven space aware assortments
Demand Signal Analytics augments traditional assortment planning and optimization methods by exploiting the latest in cloud based technologies to analyze line by line, basket by basket transactional information to define demand transference. Brand loyalty is becoming ever increasingly dependent on customer centric capabilities and basket data analysis is the only accurate approach to determine true demand transference, allowing complete comprehension of cannibalization, across the category and down to the SKU level. This level of actionable accuracy can be applied at any level and with third party applications, such as assortment, merchandising and space management.
Bringing together fully space aware and localizable assortment planning with an automated understanding of consumer demand transfer is now a reality, through the combined power of demand forecasting with Galleria’s Strategic Assortment planning solution.
The Demand Signal Analytics solution is able to interpret low level basket data for each store and translate it into consumer insights, which can be seamlessly integrated in to the Strategic Assortment application. Many new benefits to the category can be seen in the form of drillable graphs showing the relationship between product saturation, incrementality and rate of sale, allowing better decision making at the shelf.
Cloud services continually crunches your basket data and determines consumer switching behavior, which can then be easily viewed and automatically incorporated into the assortment planning process to provide more profitable and consumer focused assortments. Demand Signal Analytics achieves this by understanding the relationship between product and consumer, to ensure that each product is truly incremental to the category and not just a “me too”.
- Clearly identifies areas of incremental sales
- Illuminates brand loyalty
- Places the spotlight on ‘me too’ cannibalizing products
- Gives immediate visibility in consumer purchasing patterns
- Provides one central demand signal repository for enhanced optimization across the portfolio
Building actionable assortments at any rate can be a challenging process, but with demand transfer, real time basket transaction analysis is easily accessible through the cloud, enabling rapid review of the combinations of attributes which are most important to consumers – facilitating a fast turnaround where required.
Customer Focused Consumer Decision Trees
Gaining that delicate balance, between customer focused and profitable assortments within a given amount of space can be a daunting task. Utilizing the power of demand transference with Strategic Assortment enables the user to craft the very best consumer decision trees. The process avoids the saturation of high KPI value products and balances products that have high customer propensity.
As complexity grows the consequences of your actions become more opaque, meaning you spend more time on spreadsheets than getting results. Combining demand transfer functionality from Demand Signal Analytics with Strategic Assortment gives you crystal clear accurate analysis of your planning, allowing you to quickly see the consequences of your new assortments on your customers and bottom line.
Targeting the right products at the right consumers in the right quantity can be daunting as the complexity ramps up. Strategic Assortment makes consumer centricity simple. You can quickly drag and drop your strategy to target your consumers where it’s profitable and at the same time ensure that you maintain supply chain efficiency.
The justification of particular assortments is forever challenged by product proliferation, planning for which can prove to be a headache. Insights available through Demand Signal Analytics provides a broader perception of new product attributes through a buddying process where their similarities are identified based on existing items in the assortment, providing vital visibility on projected performance.
Valuable insights are often overlooked due to information overload; seamless integration between Strategic Assortment and Demand Signal Analytics ensures that all intelligence is identified in the most productive manner to automatically create assortments that go beyond rationalization to deliver an optimized offering at a channel, cluster and store specific level.