What are Assortment Strategies?
Assortment strategies are the strategies that retailers use on daily basis for finding out the optimal product mix for their inventory. Assortment strategies are the process of understanding how customers shop and what they are looking for to create the right mix of products that will appeal to their target market. There are a few different approaches that retailers can take when it comes to assortment strategy, and the best approach for each store will depend on a number of factors.
It refers to the number, type, and variety of products that shops put on display for customers to buy. It’s also known as a “product assortment strategy.” As a strategic tool, it enables retailers to manage and boost sales.
One common approach is to focus on offering a wide selection of products. This can be beneficial for stores that cater to a large number of customers with diverse needs. Offering a wide range of products or many variations of a single product allows customers to find everything they need in one place, which can save time and increase satisfaction.
Importance of Assortment Strategies
There are several reasons why assortment strategy is important. Assortment strategy has a significant impact on customer behavior and the overall profitability of a company.
Some of the importance of assortment strategies are as follows:
- Assortment strategies play an important role in influencing consumer behavior.
- The right mix of products can attract new customers and increase loyalty among existing ones.
- An assortment strategy can help improve or maintain the gross margin.
- Assortment strategy can also help reduce inventory costs.
Components of Assortment Strategies
1. Product Width
The product width is defined as the number of different product categories that a store offers. It’s also known as “product breadth.” For example, a grocery store has a wide product width because it sells many different types of products.
2. Product Depth
Product depth is defined as the number of variations of a product that a store offers. For example, a grocery store might have a deep selection of apples, with different varieties such as Granny Smith, Red Delicious, and Fuji apples.
Types of Assortment Strategies
1. Wide assortment strategy
When a business attempts to provide a wide range of goods or categories, but with less depth in each, it utilizes a wide assortment or broad assortment approach. It tries to offer more variety in the sorts of product lines sold but does not do so at a high degree of specificity. A grocery shop that gives many various products but only stocks one or two brands for each sort will be using a broad assortment as their effective assortment strategy.
2. Deep assortment
A deep assortment plan attempts to provide a wide range of alternatives for a specific product category. A deep assortment strategy is frequently used by specialty stores that specialize in one or a few items. For example, a supplement store would typically offer numerous choices for consumers of protein powders using a deep assortment approach, which focuses on fewer product lines but with significant depth and variety within each line.
3. Scrambled assortment
Scrambled assortment techniques are used by retailers who wish to attract consumers from a variety of markets by selling goods that are outside of their core business operations. A store is known for its smoothies, for example, starts selling fresh fruit and packaged food in order to serve a broader demographic, including individuals who wish to make smoothies at home.
4. Localized assortment strategy
A localized assortment plan prioritizes the product mix by taking into account the tastes of the local population as well as the geographical region’s particularities. This allows businesses to meet different demands based on location and, as a result, boost revenue. H&M, for example, sells different inventories of garments in its shops in Vancouver, Canada, and Mumbai, India. Because the population of Vancouver requires warmer clothes for snow and the winter season whereas Mumbai has distinct clothing preferences and demands.
5. Mass-market assortment
Stores with larger physical storage capacity, such as Walmart and Amazon, use mass-market assortment techniques. They use this assortment strategy to target the mass market and provide as many products and types as feasible that enabling them to cater to a much bigger client base.
How Assortment Strategies Work
Assortment strategies are important for businesses because they can help to increase sales and profits. By offering a wide range of products, businesses can attract more customers and boost their bottom line.
However, it is important to choose the right strategy for your business, as not all strategies will work for all businesses. Assortment strategies should be chosen based on customer needs and wants, as well as the type of products you sell.
Working of assortment strategies revolve around the following steps-
1. Assessing the current product mix
The first step is to assess the current product mix and see what is working and what isn’t. This will give you a good starting point for making changes to the product mix.
2. Identifying customer needs and wants
The next step is to identify customer needs and wants. This can be done through market research, surveys, interviews, and focus groups.
3. Developing a product mix that meets customer needs
Once you have identified customer needs, you can develop a product mix that meets those needs. This might mean adding new products or removing existing products from the mix.
4. Implementing the new product mix
The final step is to implement the new product mix. This will involve making changes to the way products are displayed and marketed. It might also mean training employees on the new product mix.
Challenges for Small Stores
While Assortment strategies can be beneficial for businesses of all sizes, they can be especially challenging for small stores. This is because small stores often have limited space and resources, which can make it difficult to carry a large variety of products.
It is important for small businesses to carefully consider their Assortment strategy and choose a strategy that is feasible given their resources. Otherwise, they may end up with a product mix that doesn’t meet customer needs or that is too expensive to maintain.
When it comes to assortment strategies, there are a few challenges that small businesses need to be aware of:
1. Limited space
One of the biggest challenges facing small businesses is limited space. This can make it difficult to carry a large variety of products, as well as to store inventory.
2. Limited resources
Another challenge facing small businesses is limited resources. This can make it difficult to implement Assortment strategies, as well as to keep up with the demand for new products.
3 Lack of customer knowledge
Another challenge facing small businesses is a lack of customer knowledge. This can make it difficult to identify customer needs and wants, as well as to develop a product mix that meets those needs.
Despite the challenges, Assortment strategies can be beneficial for small businesses. By carefully considering their Assortment strategy and choosing a strategy that is feasible given their resources, small businesses can increase sales and boost their bottom line.
Brick-and-Mortar & E-Commerce Retailing
One of the most common Assortment strategies is to offer a wide variety of products. This strategy can be used by both brick-and-mortar and e-commerce retailers.
Brick-and-mortar retailers often use this strategy to attract customers to their store. By offering a wide variety of products, they can provide something for everyone. This can increase foot traffic and boost sales.
E-commerce retailers often use this strategy to increase their product mix. By offering a wide variety of products, they can reach a larger audience and boost their bottom line.
This strategy can be beneficial for businesses of all sizes. However, it is important to carefully consider your Assortment strategy and choose a strategy that is feasible given your resources. Otherwise, you may end up with a product mix that doesn’t meet customer needs or that is too expensive to maintain.
Tips for Assortment Planning Success
1. Keep it simple
When it comes to Assortment planning, it is important to keep it simple. This means avoiding Assortment strategies that are too complicated or that require a lot of resources.
2. Focus on customer needs
When developing your Assortment strategy, it is important to focus on customer needs. This means offering a product mix that meets customer needs and wants.
3. Be realistic
When implementing your Assortment strategy, it is important to be realistic. This means considering your resources and making sure that you can feasibly implement the strategy.
4. Evaluate regularly
It is also important to evaluate your Assortment strategy on a regular basis. This will help you make sure that your strategy is still effective and that it is meeting customer needs.
5. Study your inventory data
Calculate how many units of a product are needed to order by examining and analyzing sales and inventory data. This inventory will also aid in the development of an assortment plan.
6. Use historical data
When making Assortment decisions, it is important to use historical data. This data can help you identify customer needs and wants, as well as determine which products are selling well.
7. Test new products
Before adding new products to your Assortment, it is important to test them first. This will help you determine whether the product is a good fit for your business and whether it will meet customer needs.
8. Understand product hierarchy or Customer Decision Tree
When Assortment planning it is important to understand product hierarchy or customer decision tree. This will help you identify the order in which customers make purchasing decisions.
9. Cross merchandise
Cross merchandising is a common Assortment strategy that involves placing products from different categories together. This can help boost sales by prompting customers to purchase items that they might not have considered otherwise.
10. Use Assortment to drive traffic
Another common Assortment strategy is to use Assortment to drive traffic. This involves placing high-traffic items in strategic locations to attract customers to your store.
11. Consider space constraints
When Assortment planning, it is important to consider space constraints. This means making sure that you have enough space to store all of the products in your Assortment.
Best Assortment Planning Tools
Some of the best assortment planning tools for the comprehensive assortment strategy and effective retail assortment planning are-
- Airtable (assortment planning spreadsheet template)
- Intelligence Node
- Mi9 Retail
- First Insight
- JDA Assortment, etc
Advantages of Assortment Strategies
There are several advantages of Assortment Strategies.
Some of the advantages are-
- Help businesses of all sizes.
- Help reach a larger audience.
- Help boost sales.
- Help meet customer needs.
- Help reduce costs.
Disadvantages of Assortment Strategies
There are several disadvantages of Assortment Strategies.
Some of the disadvantages are
- Can be time-consuming.
- Can be costly.
- Can be complicated.
- Can be difficult to implement.
- Can be difficult to maintain.
On the concluding note, it is clear that Assortment Strategies can be beneficial for businesses of all sizes. Assortment strategies can help reach a larger audience, boost sales, and meet customer needs. However, assortment strategies can also be time-consuming, costly, and difficult to implement.
When developing an Assortment strategy, it is important to focus on customer needs, be realistic, and evaluate regularly. Assortment strategies can be a great way to improve your business, but they should be carefully planned and executed.
How important do you consider Assortment strategies for businesses? Please let us know in the comments below.