Retailers are pretty good with the usual approach we mentioned in the first blog post of this series. Although incrementality has a significant impact on the results – research results with real customer data show an increase of +10% in total added revenue – the effect is not a game changer.
In this post, we focus on another, slightly more complex and certainly more impressive use case: to use incrementality for pruning the assortment. Here, the usual approach is to remove products with lowest sales without considering what the customers will do if that rarely needed ingredient is not on the shelf. The strength of incrementality is to find products which can be safely removed because customers will easily substitute them with other products in the assortment. Our research shows that the amount of sales lost when removing products from the assortment can be decreased by 80%, if incrementality is taken into account.
Our research shows that the amount of sales lost when removing products from the assortment can be decreased by 80%, if incrementality is taken into account.
The saved shelf space can be used in various ways. Besides the obvious option of replacing the removed product with a new one (with maximum incrementality), the shelf space can be given to existing products in order to boost their sales through increased number of faces.