Shelf Space Optimization for Fashion Startup in India

Fashion
We helped our client who is a Fashion startup with the implementation of statistical analysis and optimization model to improve sales while staying within the constraints of shelf space.

Business Objective

Our client is a young fashion startup in India with a presence across 50+ premium stores located in metro cities. They had exclusive rights to sell a European brand of women’s lingerie in the Asia Pacific region. The product targeted premium and niche customers so shelf space was limited and expensive. The client wanted to boost sales by optimizing their shelf allocation and minimizing customer returns.

Challenge

  1. Indian stores rarely show premium imported lingerie so shelf space had to be hard-earned.
  2. Over placement of slow-moving items result in broken sets and thus returns.
  3. Under placement of fast-moving items results in opportunity loss.
  4. The large distance between storehouses and shops prevented inventory reallocation.

Solution Methodology

We collected historical sale data for the last three years to model the weekly demand of each SKU by location. We also accounted for replenishment quantity to control logistics and the available shelf space as an indicator of opportunity.

  1. Store shelf space was divided according to height into three segments, with the highest one having the most visibility.
  2. SKUs were divided into three segments of high, medium, and low base demand for the product.
  3. We implemented an optimization model that maximizes sales by determining units and shelf location of SKU on the basis of demand.

Impact

  1. Sales by volume increased by 15% in the next three months.
  2. Demand plan accuracy improved from 60% to 85% in the same period.
  3. The combined cost of purchase and logistics reduced by 10% while wastage reduced by 30%

Impact in Numbers

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