Merchandise allocation is a crucial competency for all retail business models. Allocators face a unique challenge: can you place every single item in the best possible retail location at the exact time to achieve lowest possible cost, minimal markdown and maximum profit? Can you assign optimal individual item quantities to specific stores as well as direct-to-consumer channels (retailers today don’t think in terms of the store competing with online; they think in terms of the store integrating with online).

Mathematical algorithms can optimize retail allocation store-by-store, channeling the flow of stock according to factors such as available selling space and store sales performance to ensure the right blend of items, styles, colors and sizes are provided while avoiding overstock and out-of-stock conditions. A smart, flexible allocation system incorporates analytical methods that automate allocation based on available sales histories and potential sales performance at individual stores and channels.

By reducing costs and aligning inventory with each store’s opportunity to sell, a retail allocation solution minimizes the time required to accurately allocate product while maximizing profit. Powerful, yet easy-to-configure automated work flows are essential in order to eliminate repetitive manual tasks and help planning and allocation teams stay focused on areas where their expertise is needed most.

This paper describes 10 core capabilities that are key to automating and optimizing your retail allocation process for increased efficiency and sales success.