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AI and merchandising: a key synergy for your retail space

The following is a fictional narrative yet providing real insights designed to showcase the practical benefits and strategic impact of one of our IVADO Labs’ solutions that tackles merchandising and customer experience at-the-aisles challenges within the retail industry.

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Retail&Cie at a crossroads


Meet Anthony, the Chief Operations Officer at Retail&Cie, a multinational chain of hypermarkets. Under his leadership, the company has grown, but so have the complexities, in particular, using the space wisely inside every Retail&Cie store.


In a context where every inch of retail space must be optimized to its fullest potential, decision mistakes that impact how products occupy the merchandisable space are costly. They scale quickly and can cause a negative impact on hundreds of locations.


Optimizing the space in hundreds of stores is an increasingly complex puzzle. Generic merchandising and space planning solutions with a one-size-fits-all approach fall short, and individualized attention to each store is humanly impossible. Customers’ experiences and profitability are at stake, along with the brand’s reputation.

The space optimization challenge


Sophie, Retail&Cie’s Head of Visual Merchandising, has always relied on merchandising guides called planograms to guide store layouts. These diagrams or models that indicate the placement of retail products on fixtures have served the team well so far. The corporate visual merchandisers usually create a few versions of prototypical planograms, which are assigned to multiple similar Retail&Cie stores. 


However, as the company grows, the limitations of this process become clearer. Indeed, since these planograms are based on the average sales of stock-keeping units (SKUs) across Retail&Cie multiple stores, they do not account for the sales velocity of SKUs and assortment differences specific to each individual store. This misalignment could explain the increase in lost sales reported lately within the organization.


On top of that, Sophie has been reading this study about customers faced with an out-of-stock item on their shopping list, and the results worried her: about 10% of them will not substitute the product with another brand and will end up not shopping for the item, another ~30% will go to another store to purchase the same item, so in all, out of stocks issues can lead to lost sales of 4%! Plus, Sophie also suspects that the same misalignment challenge could be the cause of increased operational costs for replenishment. 


She wishes their planograms could adapt quickly enough to the ever-changing landscape of customer behaviour and localized sales patterns. But with hundreds of stores to manage, she feels like it’s playing 3D chess on a continental scale!

The AI game changer


Sophie and Anthony obviously have heard about artificial intelligence technologies but so far, they’ve been struggling to define exactly how they could deploy it at Retail&Cie to solve these planogram issues and, hopefully, increase the overall Retail&Cie efficiency and gain a strong competitive advantage. 


That was until they were introduced to an AI-powered planogram solution from IVADO Labs. Their solution doesn’t just suggest layouts: it relies on a dynamic programming-based optimization, which aims to find the best-optimized solution that meets the needs of each Retail&Cie store.


Anthony, Sophie and their teams like the idea of an automated space optimization tool that can tailor itself to each Retail&Cie store’s unique product assortment, forecast sales demand for each item and optimize shelf space to maximize sales and minimize costs. They feel it would be like adding a whole team of world-class experts to their organization and decide to deploy the solution.

Successful results


Within months of adopting the solution, Retail&Cie experiences a transformative impact. Out-of-stock instances significantly decrease as profitability per square foot sees a notable increase. The operational efficiency frees the Retail&Cie store managers to focus more on customer engagement and less on refilling shelves —a win-win for everyone. Numbers show a 5% increase in sales and up to 20% reductions in operational costs, all achieved in record time.

Personalized approach, global impact


Interviewed about the excellent results of Retail&Cie and their digital transformation process, Anthony declares that the true benefit of this recently deployed AI solution lies in its ability to scale yet remain customized. Whether a hypermarket in Toronto or a department store in Paris, each store receives individualized attention.


With this adaptable and scalable tool, Anthony and Sophie can now envision leveraging AI in different parts of their supply chain to drive efficiency and resolve pain points.

This could become your story

If you’re working in the retail industry and looking to apply merchandising best practices to your day-to-day, optimize your customer decision-making process as well as your nesting and stacking abilities, adopt our AI solution to help you reach your objectives and improve your business.  

You know that inefficiencies and mistakes, when scaled, can cost millions. Why not opt for a solution that not only saves money but also improves revenues by helping your team to maximize assortment, respect minimum order quantities and maximize weeks of supply on the shelf?   

Scalable solutions, customization, and agile adaptability: partner with us and explore how AI can refine your retail activities.

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