The Space Allocation Problem for Temporary Displays in Supermarkets

Abstract

In this research, a novel approach to the shelf-space allocation problem of product categories to temporary displays in a supermarket is proposed. The main store aisles display similar products, which are categorized and named according to their functional characteristics such as cleaning, bakery, dairy, etc. These aisles are considered permanent locations for the product categories. Endcaps and island displays have products that are intended to stimulate additional purchases for a short time. These displays are considered temporary locations for promotional products, seasonal products, and high impulse purchase products. A store changes the products and their display area in temporary displays frequently, usually weekly. We aim to maximize sales by allocating product categories to temporary displays while considering the location and area of these displays. While we assume that the permanent locations of the product categories are fixed. This shelf-space allocation problem for temporary displays is solved both for a single promotional period and two promotional periods as this best captures the store policy. We consider two versions of the MINLP – one where each display contains only a single product category and the second where product categories may share a temporary display. Working a major supermarket chain in Turkey, we were able to compare the resulting revenues with that from the designs ordinarily implemented by the store management. Our analytical approach provides significant increase in revenue by optimally siting and sizing the product displays.