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Overview
Overview
A major Indian grocery retail chain with 50+ stores across 20+ cities in 15+ states faced mounting challenges: unsold inventory had caused a ₹14+ million loss over three years, alongside a 23% drop in sales-to-inventory ratio. Offering 33 product families from groceries to automotive parts, the client needed a data-driven approach to understand customer behavior at each store and optimize inventory management.
The Challenge
The Challenge
The key issue was a disconnect between stock levels and actual customer demand. Despite a wide product assortment:
13 of 33 product families recorded virtually zero sales over 4.5 years.
Seasonal sales peaks (December, mid-year) were poorly managed, leading to stock outs of popular items and accumulation of slow-moving goods.
All stores followed a centralized, uniform inventory strategy, ignoring regional demand differences.
Specific stores, were underperforming, with stagnant inventory masking potential opportunities.
Without intervention, continued misalignment between inventory and demand would perpetuate losses and reduce profitability.
The Solution
The Solution
AEM Consulting conducted a 4.5-year sales data analysis, incorporating external factors such as holidays and oil prices, which significantly influenced purchasing patterns in India. Key initiatives included:
Product Portfolio Rationalization: Phased removal of the 13 non-performing product families.
Dynamic Inventory Adjustment: Developed a forecasting model to boost stock of high-demand items during peak periods (December, mid-year, holidays).
Localized Inventory Strategy: Tailored stock for underperforming stores based on local demographics and purchasing habits.
Performance-Based Store Focus: Prioritized forecasting accuracy for high-volume stores and implemented improvement strategies for lagging branches.
Results
Results
Within one year of implementing these changes:
Inventory loss eliminated: Discontinuing non-performing product lines removed the ₹14 million annual loss.
Sales-to-inventory ratio improved by 18%, reversing the prior 23% decline.
Optimized stock levels: Stores now align inventory with actual customer preferences, increasing turnover.
Data-driven decision making: The client transitioned from reactive to proactive inventory management, using insights to maximize sales and reduce waste.
The project not only reduced financial losses but also enhanced operational efficiency, ensuring that each store stocked the right products at the right time, aligning with customer expectations.
For expert assistance in leveraging data to optimize your retail operations, streamline inventory management, and boost sales performance, please contact AEM Consultancy.
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