Segmentation strategies for managing retail supply chains

Abstract

High-technology manufacturing companies often face rapid price decline and capacity constraints. Especially in the retail side of the business where the supply chain is much longer and revenue is sometimes not recognized until the sell-through point, optimizing inventory positioning is critical. No longer is a one-size-fits-all approach sufficient; in order to perform optimally, manufacturers should categorize their retailers, stores, and products, and tailor their strategy for each accordingly. This work shows how to use metrics such as gross margin return on inventory investment, models and tools such as assortment, promotional risk, supply chain, and replenishment segmentation to drive improvements in inventory performance and recommends ways to apply them in different retail chains. In particular, three retailer types - discount retailers, specialty retailers, and convenience retailers are discussed.