System and method for optimizing display space allocation of merchandising using regression analysis to generate space elasticity curves

A system uses elasticity modeling to enable cross category optimization of store display space for merchandise for any group of stores and items using point-of-sale data. A space elasticity curve is periodically created for each combination of performance metric, store cluster, planogram, and item segment, and is then scaled by individual store. A user can select any combination of stores and planograms, and the system then reconstructs the elasticity curves as individual "synthetic items," which are averaged across the selected stores by creating average synthetic SKU records that reflect the estimated average store performance in each performance metric. The synthetic items are then used to either evaluate macro space performance across or within store areas, or to determine the best use of overall store display space available to permit management to optimally allocate display space for merchandise.