Assortment management is a crucial aspect of retail operations. It involves careful selection and organization of product mix to maximize sales and meet Customer needs. However, traditional assortment management methods may no longer be sufficient in today’s rapidly changing, data-driven retail landscape. To maintain competitiveness, retailers must employ modern assortment management techniques that leverage technology and data analysis.
In this article, we present five innovative methods that can revolutionize the approach to assortment management and drive business growth. From predictive analytics to artificial intelligence-based tools, these strategies can help retailers optimize their product offerings, enhance Customer satisfaction, and increase profitability. Read more The role of the Buyer in the company.
❓What are Assortment Strategies❓
Assortment strategies involve merchandise planning process and managing the selection of products to be offered by a company. Effective merchandise assortment strategies are crucial for the success of businesses, especially in retail industries, as they help understand Customer preferences and ensure the right product selection. Assortment strategy may encompass various factors, such as product categories, seasonal situations, market trends, Customer preferences, and local conditions. A sufficiently diversified product assortment guarantees that a company can attract new potential Customers and satisfy the needs of existing ones.
Three components are essential in assortment strategy: product width, product depth, and assortment width.
5 Modern Assortment Management Methods
1. Wide Assortment 📗
Modern assortment strategies for stores and retail chains focus on offering a wide variety of products. This involves providing a more diverse range of products to adapt to Customer requirements and changing market trends. The idea behind a wide assortment is to offer Customers a greater number of product categories with fewer options to choose from in each category.
For example, in a grocery store, you might find products in various price ranges and, for instance, a gardening section with a more limited selection. Stores or retail chains adopt this approach because it is beneficial for both buyers and sellers.
2. Deep Assortment 📘
The deep assortment strategy is a popular sales strategy that involves offering a many product variations within a single category. Specialty stores that employ a deep assortment strategy focus on one product category and provide a broad selection within that category.
For example, the aforementioned grocery store may solely concentrate on grocery items but offer a greater variety. This strategy provides several benefits, including Customer satisfaction from a wide choice of products and a competitive advantage.
However, it may pose challenges, including high costs and inventory planning complexity. It could also lead to stockouts if insufficient quantities are ordered or result in losses if products expire.
3. Mixed Assortment 📚
The “scrambled assortment” is a store assortment strategy where sellers combine and place products unrelated to the main store industry in one place. Non-core products aim to attract a broader Customer base and increase sales. This allows for a more efficient use of store space and, consequently, a higher turnover per square meter.
For example, a sports goods store might offer complementary products like isotonic drinks. By diversifying the assortment, the store attracts Customers who need these products without having to search in other stores.
4. Local Assortment 📍
Local assortment is a store strategy that tailors offerings to the specific location, based on the needs and preferences of loyal Customers in that region. This strategy allows retailers to provide the right product for a given place, improve sales, and enhance Customer satisfaction.
The key to success lies in market research and attribute-based techniques, estimating demand patterns between stores and selecting an assortment that generates maximum value for each store. Clustering stores allows for more efficient supply chain models and proposing an ideal assortment for each store.
For example, a supermarket offering fresh produce from local farmers to promote local production and access to fresh products. The store may also introduce products popular in the region, such as traditional dishes or unique local brands. This attracts Customers who appreciate local products and want to support the local economy.
5. Mass Market Assortment 🏟️
The mass-market assortment strategy involves offering both a wide and deep assortment of products from various categories. It is an effective approach that requires significant resources and warehouse space. It caters to Customers who prefer convenience and one-stop shopping, providing them with a broad range of products. This strategy has been implemented by retail giants like Walmart and Home Depot, but its effective implementation poses a challenge for smaller retailers.
⚠️ Importance of Assortment Strategies ⚠️
In today’s highly competitive retail industry, focusing on assortment strategies that allow a store to stand out in the market is crucial. Assortment strategies guide sellers in choosing the products they offer in their stores. The aim is to select products that meet Customer needs and preferences while generating the desired profit.
For stores looking to succeed in the market through a proper assortment strategy, thorough market research and adapting the assortment to Customer requirements are essential. A good assortment approach involves not only selecting products but also choosing the right store location, appropriate atmosphere, and alignment with Customer preferences. Understanding what Customers need and which products appeal to them is key to do an assortment planning strategy.
Choosing the right assortment strategy can contribute to increased sales and business profitability. A prime example is the IKEA retail chain. The company is renowned for its wide assortment of furniture and decorative accessories, offering low prices and high-quality products. IKEA has been recognized as one of the best furniture stores globally, and its success stems from understanding consumer needs and preferences, delivering products that perfectly match their requirements. Creating the right assortment that meets consumer demands combined with an attractive price results in success for the store.
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