The Utilization of the Pareto’s Rule “80–20“ in the Streamlining of Sales Range

Abstract

Purpose of the article: The article is focused on the use of Pareto’s rule “80–20” in streamlining of sales range. It is based on the assumption that 80% of the impact is due to 20% of the causes. The application of this rule on the chosen problem can be expressed as a question: “Which products from an assortment of shop bring the highest share of the sales?” Scientific aim: The primary aim is to develop a methodology for evaluating of assortment effectiveness in retail stores with food, based on analysis of contribution of individual items range on margins and sales volumes. Methodology: The general procedure of analysis using Pareto’s rule is based on secondary data which come from scientific works done by other researchers in the area. The universal procedure was further modified for the investigated problem. The outcome is a methodology for evaluating of the range saleability. The method of case study was applied to verify the practical application of the methodology. Findings: The proposed methodology is practically useful as a tool for evaluation of the shop assortment in an effort to achieve higher sales efficiency and customer value. The principles, the application and the evaluation of the methodology are demonstrated by the case study called “The analysis of the sales range in a retail food shop”. Conclusions: The research focuses on the food retail. Therefore the proposed methodology suited to condition in this field. For other retail or wholesale areas would be the methodology applicable only after proper changes in segmentation of assortment and the calculation formula.