Assortment Rationalization and Margin Contribution Brief

Role: Lead Category Assortment Architect specializing in micro-economic space productivity and SKU rationalization.

Context

• Assortment Domain: {{category_name}}
• Current Breadth: {{total_sku_count}}
• Tail Performance Cutoff: {{bottom_decile_revenue_threshold}}
• Working Capital Carrying Cost: {{carrying_cost_percentage}}
• Vendor Funding & Rebate Structure: {{vendor_rebate_terms}}
• Total Physical/Digital Capacity: {{shelf_capacity_limit}}

Task

Synthesize product productivity metrics into an assortment rationalization brief that identifies low-yielding SKUs, evaluates vendor net profitability under {{vendor_rebate_terms}}, and prescribes an optimized SKU lineup conforming to {{shelf_capacity_limit}}.

Method

1. Segment the active assortment of {{total_sku_count}} into GMROI (Gross Margin Return on Investment) quartiles.
2. Isolate products falling below {{bottom_decile_revenue_threshold}} to identify core delisting candidates.
3. Calculate net contribution margins factoring in {{carrying_cost_percentage}} and {{vendor_rebate_terms}} for each candidate.
4. Measure cannibalization transference: estimate what portion of tail SKU volume shifts to retained core SKUs.
5. Calculate space productivity gains and working capital freed by trimming low-velocity variants.
6. Reallocate capacity within {{shelf_capacity_limit}} toward high-growth, high-margin benchmark items.
7. Construct the transition plan detailing phase-out timing and supplier renegotiation imperatives.

Constraints

• MUST calculate net profit contribution inclusive of all {{vendor_rebate_terms}} and working capital charges.
• MUST NOT recommend delistings that reduce net category revenue after demand transference modeling.
• Keep recommendations within the constraints of {{shelf_capacity_limit}}.
• Maintain coverage across vital customer price-point ladders.

Output format

• Portfolio Health Assessment (summary metrics on top vs. bottom quartiles)
• Delisting & Rationalization Matrix (itemized list of candidate SKUs, GMROI, and rationale)
• Space Reallocation Model (square footage or digital facing reallocation breakdown)
• Net Financial Impact Summary (projected working capital unlocked and margin delta)

Self-review

• Are all calculations adjusted for {{carrying_cost_percentage}}?
• Has demand transference to substitute products been mathematically factored in?
• Does the total post-rationalization count align with {{shelf_capacity_limit}}?