Context and Challenge
A retailer was concerned with declining sales in a high-shrink category. Traditionally, products in this category were kept behind the counter and customers needed to ask store associates to access the items. This strategy reduced shrink but hurt sales.
To maximize sales, the retailer wanted to understand the incremental impact of switching to “keeper cases.”
Approach
The retailer used Test & Learn® to analyze the impact of “keeper cases” on both shrink and sales. Test & Learn® helped the retailer answer the following questions.
- What is the overall impact of the “keeper cases”?
- Where did the “keeper cases” perform best?
- How can we target rollout to maximize profitability?
Results
Test & Learn® found that the new shrink strategy resulted in an immediate 1.5% lift in sales; however, cost of goods lost increased by $50 per store per week.
Test & Learn® built a model for sales and shrink based on the strongest drivers of performance. By rolling out the new strategy using the Test & Learn® model, the retailer could drive $4.6MM in incremental annual profit.
