Planning merchandising decisions to account for regional and product assortment differences

The last decade has fundamentally changed the face of retailing! The genesi s has been increased customer fragmentation, enabling technologies such as the internet and increased competition In this era of "hypercompetition," r etailers need to have a better understanding of the performance of individu al stores so they can more accurately plan their merchandise assortments an d set more realistic merchandising goals. In this paper, we determine the p erformance of retail outlets relative to the "best practice" set of outlets and demonstrate the importance of accommodating both regional and assortme nt differences. We empirically assess the performance of stores from a majo r Fortune 500 multinational retailing chain. Multiple inputs and outputs fr om 59 stores in three regions were used to determine sales goals for two di fferent product categories. The results of three alternative models suggest that incorporating both assortment and regional differences significantly affects both performance and predicted sales volume estimates. Implications and avenues for future research are discussed.