Retail Assortment Planning: Definition, Importance Explained
Setting up your store to be as good and fast for customers is essential. You can’t just stay the same, or you’ll get left behind.
One of the best ways to increase profitability is by running in-store events or partnering with influencers. You could also try different marketing strategies like PR, social media ads, etc.
Not sure if you’ve heard of this, but assortment planning is a tactic that can be used to promote product diversity.
We’ll explore the definition of assortment planning, why it matters to your merchandising strategy, and how you can use it.
Assortment planning is when a store decides how to optimize the visual merchandising, layout, and placement of products for conversions. This can be done by a period such as daily or monthly.
Retailers often confuse merchandise assortment planning with purchasing.
To drive the most sales, retailers have a specific strategy for product placement. For example, they will highlight bathing suits in spring and summer instead of winter because people are more likely to buy them.
It’s about predicting demand and figuring out how to manage that demand.
The variety of products is also different for each store. If you have more than one location, A’s selection might be diverse from B.
For example, it is constantly bathing suit season in Florida, while Montana is seasonal.
When retailers plan their assortment, they don’t just consider the product type. They also look at the size, color, and price, among other things.
When talking about the variety of categories, it means how many different items you store. The depth is when you are referring to individual products.
Why is it Important?
Online shoppers don’t seem to be as motivated by spending money in stores. 40% of customers who come into a store buy more than they had planned, but only 25% of online shoppers are the same.
What is driving this higher average transaction value? Well, some people think it’s strategic product planning. We know that more opportunities exist for impulse buys, better customer service, and an increased chance of discovering new products.
So, a well-planned assortment is invaluable for maximizing your retail store’s conversion rate.
We’ve already mentioned that the best way to plan for your inventory is by looking at more than just seasonality. Other considerations include:
- Price point
- Shelf life
- Category proportions
- Width and depth
- Visual merchandising
- Store layout
- Growth goals
- Reorder points
- Lead time
Huh, that’s a tough one. That is why assortment planning in large stores and enterprises is typically done by people who have more experience with this type of thing.
If you want your customers to stay longer and spend more, then here are some things that might help:
Strategies to Get Success
Set Your Goals
You can’t expect to make progress in your business without setting goals. Before starting a new project or work term, you must take time and plan what you want to get out of it.
Figure out what you want your sales team to accomplish, then share that goal with them. This will give everyone a sense of responsibility and feel that they are all working towards one common objective.
If you’re new to goal-setting, take a look at your past retail analytics and find out what worked well in the past. This will be an invaluable starting point for setting realistic goals.
The best way to find out what people want is by looking at the top sellers and analyzing why they’re so popular. Where were they located when sold? How did you promote them? Who purchased them, and how long ago was it that this happened?
The product hierarchy is a process customers use to evaluate products in the same category. It’s called customer decision tree, or CDT.
For example, if you sell clothes and a customer enters your store wanting to buy something new, they’ll head over to the section of clothing that holds sweaters. They will then browse through all the options available.
When they first look at a product, the shopper might be considering materials and colors.
To successfully sell a product, you need to consider that every customer is different. They might have varying CDTs for the same products, and it’s essential to think about what they want and why they want it.
Store clusters are when you group multiple storefronts that share a similar trait. For example, they could be exact or offer the same product type.
After noticing that these stores share the same characteristics, you might do your assortment planning similarly for all of them.
Cross-merchandise displays are helpful because they can help customers find what they’re looking for based on their affinity to specific product types. Cross merchandising is when you pair complementary products together in the same category. For example, a chocolate chip cookie cross merchandised with milk is called “cross-merchandising.”
The best way to know which products should be next to one another is by looking at the data from your POS. It’s not as hard as you think.
To get people buying, you need a slight impulse. You can’t just have the things that they’re going to buy because then there’s no point in coming into your store at all.
Always try to place impulse buys near top sellers and at the point of purchase. They are perfect for people who want something on a whim but don’t have time or money to think about it.
There are a few ways to help people make impulse purchases. These include:
- Promotions: People are creatures of habit and will often purchase an item if it is on sale, even though they had no intention to buy the product. That’s why these steep discounts can be an excellent way for businesses to make more money.
- Urgency: One of the best ways to attract customers is by offering limited-time sales and products. When you do this, people are more likely to buy because they want what’s in short supply.
- Trendy: impulse buys aren’t necessities — Offering the latest novelty items is a great way to make customers excited about purchasing.
- Associates: One way to increase impulse purchases is by having your employees suggest a purchase based on what the customer has in their cart.
Define Your Balance
With a successful assortment plan, you can drive the most sales possible. But don’t forget to vary your product offerings and try out new trends.
Shoe shops mix in some new and exciting styles with classic pieces, which Christian Louboutin does well.
Louboutin is known for carrying classic and more modern styles, but they constantly refresh their collection with seasonal looks.
There are many different ways to motivate salespeople. Anchor pricing is a strategy that makes sense when trying to determine what items go on sale and for how long.
For example, one priced at $500 and another for $100, but were precisely the same thing. People felt compelled to buy because it was in between.
You can also balance out your assortment by using the high-low strategy. For example, Ulta Beauty is known for its many different price points.
Ulta has a wide range of skincare items, from low-cost to high-end.