Retail category management: State-of-the-art review of quantitative research and software applications in assortment and shelf space management

Retail requires efficient decision support to manage increasing product proliferation and various consumer choice effects with limited shelf space. Our goal is to identify, describe and compare decision support systems for category planning. This research analyzes quantitative models and software applications in assortment and shelf space management and contributes to a more integrated modeling approach. There are difficulties commonly involved in the use of commercial software and the implementation and transfer of scientific models. Scientific decision models either focus on space-dependent demand or substitution effects, whereas software applications use simplistic rules of thumb. We show that retail assortment planning models neglect space-elastic demand and largely also ignore constraints of limited shelf space. Shelf space management streams on the other hand, mostly omit substitution effects between products when products are delisted orout-of-stock, which is the focus of consumer choice models in assortment planning. Also, the problem sizes of the models are often not relevant for realistic category sizes. Addressing these issues, this paper provides a state-of-the-art overview and research framework for integrated assortment and shelf space planning.Retail Decision making/process Decision support systems Information systems Newsboy problem