Visual Rules

Visual rules & Visual Merchandising Weight

Visual rules are taken into account to understand when a product is fragmented in a store. The understanding of the algorithm is that, if the product doesn’t comply with the Visual Rules, it is not displayed and therefore has no chance to be sold.

Nextail considers there is a leftover situation when a store is holding less units or size curve weight than those specified in the visual rules configured.

When calculating store transfer, the algorithm considers the importance of the leftovers by using the Visual Merchandising Weight (VMW) parameter. This parameter determined at scenario level is the percentage of importance that the algorithm will give to fulfilling visual rules during the transfer calculation: the higher the percentage, the more effort the system will make to avoid leftovers when doing the transfers in both destination and origin stores.

⚠️ The VMW is the percentage of importance given to the Visual Rules: it does not change the % of the size curve set or minimum units, but influences the importance of its compliance.

This means that, if the Visual rules set are 5 minimum units per product, and 50% of the size curve:

If the user inputs a 80% of Visual Merchandising Weight, it means that the algorithm will give a 80% of importance to complying with the 5 minimum units and the 50% of the size curve in each store.

Leftovers

Nextail considers 2 types of leftovers:

Leftovers prior to the execution: before calculating store transfer, the store whether at origin or destination does not comply with the set visual rules.
Leftovers generated by the ST movements: after calculating the store transfer scenario, some leftovers are generated because of the movements proposed.

If some leftovers were generated as a result of the trips proposed in the scenario (the second type), these newly created leftovers in the origin stores can be fixed from the proposal by clicking on the leftovers button that will only appear if there are some to fix in a non-submitted scenario. Then, a confirmation screen informing the amount of products and units we are going to move will pop up.

In order to decide where to send the units considered as leftovers, Nextail will:

Use an existing trip of that specific product between the sender and the receiver store to avoid any extra logistic costs.
If more than one store is receiving the product from the sender, then the receiver with the highest Demand forecast at a product level will be selected.

Visual rules impact example:

Let’s see the impact of visual rules application in a ST scenario.

Use Case 1: NO Visual Rules setup in the system

Without Visual Rules, Nextail's transfer recommendation optimizes stock allocation based mainly on demand forecast, suggesting inventory transfers from stores with lower sales potential to stores with higher sales probability.

In this case, the absence of sales potential (forecast=0) in stores 3029716 and 3029486 almost empties the store stocks, leaving a couple of single units left. On the other hand, store 3025017 receives nothing since its sales potential in comparison with the other store in scope of the calculation might not generate a sufficient ESI (Estimated Sales Increase) or does not exceed the Efficiency Threshold to be eligible to store transfer and receive extra units, leaving the store in a leftover situation as well.

Use Case 2: Visual Rules setup in the system

In this case, the application of Visual Rules forces Nextail to respect in the scenario:

A minimum of 5 units of the product
A minimum of 60% of the size curve weight

Nextail tries to find a proposal that complies with these rules when calculating store transfer scenarios, encouraging movements to destination to make sure the product will be displayed and have a sales potential (store 3025017) or keeping units stores (3029716 and 3029468) to fulfil the request of minimum 5 units and 60% of the size curve total weight, even though based solely on the demand, it would not make sense to keep the units in those stores.

ℹ️This means that configuring and following the visual rules can lead to sending either more or fewer units, depending on the specific case, demand forecast, and stock situation of the stores.

How can visual rules be configured?

This parameter is configured through a Data Upload - having previously filled up the following template:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
Write here…	Write here…	Write here…	Write here…	Write here…

There are endless options to configure your Visual Rules, always depending on which business cases you are trying to cover with them.

We could have a universal rule (that applies to all products in all stores) or different rules applying to different categories of products and stores. For example;

In my business only Denim has a hard rule that states that unless 10 units of several sizes are displayed, the product will be taken to the stockroom:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
Retail Stores	Denim	30%	10	-100

In my business, only Flagships have this hard rule where unless 5 units across several core sizes are displayed, the item will be taken to the stockroom:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
Flagship	All Families	50%	5	-100

In my business it is important to maintain a minimum of 4 units across different sizes in all families and types of stores:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
All Stores	All Families	25%	4	-100

In my business, only Full Price stores take stock to the stockroom when none of the core sizes are available, while outlets display everything they have regardless of the size:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
Full Price Stores	All Families	40%	-	-100

In the transfer I want to run, Full Price stores take stock to the stockroom when less of 6 units are available, while outlets can display as long as they they have at least 3 units of the product:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
Full Price Stores	All Families	-	6	-100
Outlet Stores	All Families	-	3	-100

In the transfer I want to run, I created two categories to configure my trips (Origin stores and Destination stores). The Origin stores should keep at least 30% of the size curve and 2 units, while Destination stores should have covered 60% and 5 units:

StoreCategoryName	ProductCategoryName	MinSizesPercentage	MinUnitsPerProduct	UnitsOverSizeNumber
Origin Stores	All Families	30%	2	-100
Destination Stores	All Families	60%	5	-100

⚠️For this use case, the user would have to specify in the Trips configuration in the allowed trips, which stores are sending and receiving.

Best Practice: It's advisable to use automatic categories when setting visual rules. This ensures that any changes in your network, such as the introduction of new stores or products, are automatically included without requiring manual updates to your rules.

Once these are configured, they operate automatically. In other words, this is a one-time setup at category level - as shown on the examples above (e.g., by product family or store group) -, and applies across all products and stores within the categories used.

Once the template is ready, go to “Daily Data → Data Upload → Visual Rules” and upload it:

⚠️ The visual rules setup used for the Store transfers is the same in use for Replenishment.

Conclusion

As a conclusion, applying visual rules is a trade-off between inventory efficiency and merchandising consistency. While it enhances product visibility and brand experience, it can also lead to inefficiencies in stock allocation, increasing the risk of unsold inventory. The optimal approach depends on balancing sales maximization with store presentation standards, leveraging dynamic configurations (e.g., Visual Merchandising Weight) to adapt to varying sales contexts.