Thomas Emmerich, VP Sales Operations & Spokesman of the Board, SAS Institute EMEA You Asked Does size really matter in retail?

If "Retail is Detail" and "Right Product, Right Place, Right Time" is the mantra for success - then yes; size does matter.

It is no longer enough to allocate merchandise based on past regional performance with one ration for size and colour across all stores. Retailers these days must have an understanding of demand variance by market in order to reduce stock outs, lost sales and heavy reliance on Markdown promotions.

Forward-thinking retailers now plan and allocate merchandise at the store level based on the size and colour demand through analysis of shopper behaviour at each individual store outlet or retail channel. Detailed analysis of customer and sales data using reveals distinct differences between stores, even within the same region. These insights are utilised to optimise merchandise assortments as part of the annual planning process and just as importantly, In-season.

This utilisation of "Predictive Analytics" to forecast shopper demand has been a growing phenomenon through out every segment of the retailing arena. Over the past 5 years this predictive forecasting capability has grown to encompass more and more variables within the shopping environment. Outlet ranging decisions are increasingly incorporating factors that include outlet profiling, promotion uptake propensity, pricing sensitivity and now sizing optimisation.

This new predictive capability (The US retailer Kohl's recently announced utilisation of Size optimisation at the NRF show in New York) enhances the retailer's merchandising capabilities by providing an analytic view of consumer preferences by location. Identifies and recommends optimal size profiles to improve profitability at the store level and integrates these capabilities into existing and/or anticipated operational systems.

Size Optimisation is a three-stage process. The first part is calculating a predicted demand level by size according to each store profile; even neighbouring stores can have considerable differences. Secondly, retailers have to work closely with their suppliers to ensure pre-packs are appropriately bundled. And, finally an optimal allocation and replenishment system must be configured to meet the new assortment requirements.

These key steps are easy to visualise but, because they are totally co-dependent, invariably complex to deploy. For instance the first stage is not just about making assumptions based on historical Point of Sale data but more akin to data analytical methodologies commonly used within industry marketing and financial departments. i.e. Data mining for sales patterns and out-lying anomalies, incorporating algorithms for grouping and clustering stores according to size demand for each common set of apparel that meet both differential size and differential style preferences.

Does size really matter?

One Multi-billion US discount retailer has already estimated 3% sales increase in one key item across all stores through the employment of Size Optimisation within their merchandising planning process - you do the math!

As VP of Sales Operations Thomas Emmerich is responsible for overseeing the implementation of EMEA-wide business and sales strategies, global accounts and reselling programs in SAS' offices in Europe, Middle East and Africa. In his role as Area Director Emmerich has full Profit & Loss responsibility for Portugal, Spain, Switzerland, South Africa, Austria, Greece, Turkey, the Middle East and Israel. As a result, Emmerich speaks authoritatively on economic and IT developments within those countries. Emmerich focuses particularly on the development of new business in two of SAS' key markets; customer relationship management (CRM) and data warehousing. He is an expert speaker on the implementation of CRM solutions to improve the profitability of e-commerce initiatives. Born 1957, Thomas Emmerich graduated in Mathematics from the University of Wuerzburg in 1982. SAS Institute EMEA