Hyper-local sustainable assortment planning

TL;DR

This paper introduces a multi-objective optimization method for assortment planning that balances revenue and environmental impact, enabling retailers to select sustainable product assortments with minimal revenue loss.

Contribution

It incorporates environmental impact into assortment planning using the Higg Material Sustainability Index, providing a Pareto-front of optimal trade-offs.

Findings

Lower environmental impact assortments are achievable with minimal revenue loss.

The approach offers a practical tool for sustainable retail decision-making.

Application to a leading fashion retailer demonstrates real-world effectiveness.

Abstract

Assortment planning, an important seasonal activity for any retailer, involves choosing the right subset of products to stock in each store.While existing approaches only maximize the expected revenue, we propose including the environmental impact too, through the Higg Material Sustainability Index. The trade-off between revenue and environmental impact is balanced through a multi-objective optimization approach, that yields a Pareto-front of optimal assortments for merchandisers to choose from. Using the proposed approach on a few product categories of a leading fashion retailer shows that choosing assortments with lower environmental impact with a minimal impact on revenue is possible.