TSO, or Total Store Optimization, takes the guesswork out of category space allocation within a department or across an entire store. The TSO space allocation engine right-sizes categories, assortments and inventories in the aisle to enhance consumer satisfaction and maximize retailer performance. In particular, TSO was developed for three primary reasons:
1. Existing processes and tools allocate space; they don't optimize it. These systems traditionally:
- Reinforce history vs. consider potential
- Ignore marginal contribution of categories, items and facings
- Can't identify sources and size of performance gains
2. Existing processes and tools under-invest in growth categories, and over-invest in
declining ones
- Growth categories are space-constrained; they can't reach full potential
- Declining categories are over-spaced, but which categories should expand?
3. Existing processes and tools do not incorporate true profit,
so 50% of items lose money in a typical supermarket*
*2005 WBC Grocery SuperStudy
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TSO advantages
1.) It optimizes space, assortment and inventory doesn't just allocate them
2.) It identifies categories that win, those that lose, and why they do
3.) It can enhance total store profitability by 5% or more over the impact of 'fair-share' based refreshes
Legacy space management tools only report results. Optimization Recommends Change and Predicts Financial Impact!
How It's Different
Optimizes category size based on true marginal gains across total store, department, aisle, category, subcategory, segment, brand, item, and facing.
Maximizes multiple objectives (sales, margin, gross profit, true profit, blended goals, etc.).
Predicts the maximum possible financial benefit available subject to space constraints (zero sum, or flexible for new stores).
Determines incremental value at each level down to the facing.
Enforces merchandising and supply chain rules to balance inventory and protect against out-of-stocks.
Balances inventory within the right amount of space to minimize out-of-stocks.
Includes market data to simulate full variety potential.
Models item assortment within the right space to determine the correct number of SKUs.
RETAILER, FMCG, BUSINESS PARTNERS
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Interested in learning more about how TSO can help your business? Contact us today for a free demonstration!