Hard goods retailers face the core challenge of capital value maximization. Converting capital into inventory over a planning period and then converting inventory back to capital in continuing profit making turns is a retail fundamental. Putting the correct emphasis on the product mix to manage risk and consistently get outstanding capital inventory performance is necessary for lasting retailing success.
Managing and hedging risks from volatility by usefully applying the knowledge contained in past transactional histories, allows AlloK8 to discover very good initial solutions to optimize future profit expectation.
The capital inventory problem can be divided into :
- Demand forecasting – the act of predicting expected demand for products over a planning interval.
- Purchase Planning – the act of apportioning an amount of capital and using the tuned demand forecast to get the best profit expectation while maintaining appropriate product and category diversity to manage risks from volatility.
- Price Point Analysis – optimizing pricing to liquidate excess stock and extract maximum margins from sell throughs.
- Fulfillment and Distribution – Replenishing and restocking store inventories in appropriate quantities to tightly fill demand.
The use of AlloK8’s data mining capability is a powerful addition to the retail decision support tool chest because it allows profit maximization to be condensed into an objective framework. Best of all AlloK8’s proven system makes the otherwise complex task simple. The problem solving methodology is already fine tuned, allowing retailers to benefit from our best practices knowledge acquired from successful retail implementation.