Sunday, August 30, 2009

Using T test to understand shelf placement decisions

Lets consider a simple scenario.

Say ABC retail is setting up a new store in Frazer town area

Pre store launch catchment area/competitive store analysis helped in deciding store format and product mix to display

The store in Frazer town, the following categories are relevant for the consumer ( Mangloreans, Muslims,Goans )
Non veg food items
Hair care
Basmati Rice
Atta
Kerala Parottas

The store manager of Frazer town branch wants to optimize the 12000 sq ft of shelf space he has

He wants to know which “Hot” shelves and he has a few hypothesis based on experience which he wants to test

A/B Multivariate testing can come handy to discern which shelf combination maximises revenue and minimize inventory carrying cost Or if the product is moving slow ( it becomes a slow moving item and a promotion /advertising may be required to stimulate sales )

HOW DOES A STORE MANAGER DECIDE SHELF PLACEMENTS TO MAXIMIZE STORE REVENUE AND MINIMIZE SHELF SPACE INVENTORY
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