PREDICTION OF SHARE OF VISUAL INVENTORY USING STORE DISPLAY, CHANNEL, AND PRODUCT VARIABLES

Abstract

The purpose of this study is to predict the share of visual inventory (SOVI), which is defined as the number of stock-keeping units (SKUs) of a company’s products, calculated as a percentage of the total SKUs on the display of all products. Research studies in the past have focused mainly on the impact of inventory, which includes back end and visual inventory, on sales but less attention has been given to the impact of SOVI on sales. To address this research gap, this study attempted to create an analytics model to predict SOVI at the category of soft drinks level using four predictor variables namely point of purchase display, channel/sub-channel, package group, product category, and derived variable gross national income (GNI). The results were encouraging confirming the effectiveness of such a model. The researchers utilized a data set collected over a period of 18 months (February 2016 to July 2017) by a soft drink firm headquartered in the United States. Based on the findings, it is suggested that this prediction model can be utilized by other researchers and practitioners to predict SOVI of other soft drinks, fast-moving consumer goods (FMCG), and food and beverage companies.