Assortment Management in DIY Retail with Portfolio Matrices (On the Example of “Leroy Merlin” Stores)

Abstract

In the past few years, retail trade in Russia has undergone quite a few changes. The transformation of retail occurs primarily due to the widespread introduction of digital technologies, which inevitably affects the management processes existing among retailers. Thus, possessing big data and applying advanced statistical methods to it, the management of retail chains can significantly speed up the decisionmaking process and, moreover, make these decisions more substantiated.

Updating of approaches specifically to assortment management in DIY retail (Do It Yourself) is an extremely important issue for Russian business in the coming years, due to increased competition in the online segment of the DIY market. In an effort to increase their sales, retailers are adapting the assortment matrix of each store in accordance with the demand presented in its coverage area. This is where the need arises for the use of special tools for assortment analysis.

The aim of the study is to develop recommendations in the field of managing a large assortment portfolio for DIY retailers.

The objects of the study were several Leroy Merlin hypermarkets located in Novosibirsk. One of the  authors of the study has experience working in a company as a head of the trade sector, which indicates a deeper understanding of the specifics of the work of both the company and the industry as a whole. As a result, in managing the assortment portfolio at the level of goods, an adapted method of the modified BCG matrix is proposed. Consideration of changes in the position of goods on the matrix in dynamics made it possible to formally determine the boundaries between its quadrants. A clearer understanding of the boundaries of the matrix simplifies its regular construction and understanding the distribution of goods by groups allows build dashboards that are updated in real time.