Assortment planning: What Is It and How To Use It To Sell More
We take a look at Assortment Planning - What is it and how is it used to sell more?
Assortment planning: What Is It and How To Use It To Sell More
In the ever-evolving retail landscape, it is crucial to continuously optimise your store to provide a superior customer experience and to turn browsers into buyers. Standing still is the quickest path to falling behind your competitors. While there are numerous strategies available to increase profitability, such as in-store events and influencer marketing, there is one often overlooked tactic that can make a significant impact: assortment planning. In this article, we will explore the concept of assortment planning, and how to use it to drive store profitability.
What Is Assortment Planning?
Assortment planning is the process of strategically selecting and curating the range of products or merchandise that a retailer offers to customers. It involves carefully considering factors such as customer preferences, market trends, sales data, and inventory management to create an optimal mix of products that align with the retailer's target market and maximise sales and profitability.
Assortment planning goes beyond simply choosing which products to sell. It involves analysing customer behaviour, understanding market dynamics, and leveraging data to make informed decisions about product selection, variety, pricing, and placement. The goal is to create a product assortment that meets the needs and preferences of the target customer base, differentiates the retailer from competitors, and drives customer satisfaction and loyalty.
Key Considerations in Assortment Planning:
- 1. Customer Demand and Preferences: Retailers need to understand their target customers' preferences, buying habits, and needs. This information helps identify the most sought-after products and ensures that the assortment resonates with the target audience.
- 2. Market Trends and Insights: Keeping up with industry trends, emerging consumer preferences, and market dynamics is crucial in selecting products that are in high demand and align with current market conditions.
- 3. Product Mix and Variety: A well-balanced assortment includes a mix of core products that drive consistent sales, seasonal items that cater to specific time periods or events, and niche offerings that target specific customer segments with unique preferences.
- 4. Inventory Management: Assortment planning is closely linked to inventory management. Retailers need to ensure the right quantity of each product is available at the right time to avoid stockouts or excess inventory, which can impact profitability.
- 5. Pricing and Profitability: Pricing strategies should align with customer expectations and market conditions to maximise sales and profitability. Assortment planning involves considering pricing tiers and product margins to achieve the desired financial outcomes.
- 6. Competitive Analysis: Assessing competitors' offerings, pricing, and positioning helps retailers identify gaps in the market and differentiate their assortment to attract and retain customers.
- 7. Technology and Tools: Retailers can leverage advanced analytics, demand forecasting software, and inventory management systems to streamline assortment planning processes and make data-driven decisions.
Why is Assortment Planning Important?
According to Forbes, shoppers are spending more in store than they are online. A fact that will be largely down to assortment planning, leading to impulse buying and the influence of personalised shopping and assistance within the store. So to convert browsers into buyers, shoppers need to be heavily influenced by assortment planning and strategic decisions to gain a higher conversion rate.
How To Sell More With Assortment Planning
- 1. Set Goals: As the saying goes - failing to prepare means preparing to fail. Understanding what you want to get from assortment planning is the first step. It’ll focus your team and give you something to aim for in the short and medium term. This could be an ideal conversion rate, sales targets or a profit goal. Whatever your goals, share it with your team so you’re all aiming towards the same thing.
- 2. Utilise Data: If you have a specific goal in mind, the last thing you want to do is to take a stab in the dark. Now is the time to put your ePOS to good use and take a look at the reporting and analysis. You can utilise past data to gauge your success and identify any trends. Good reporting will allow you to identify top sellers, is there something that they have in common and can that be used to drive further sales? Become analytical in your questions: When were they selling and their best? How are they best promoted? Why are they popular? If you focus your questions, you can dig deep into your ePOS data and work out what to do next.
- 3. The Customer Decision Tree (CDT), also known as Product Hierarchy: This is how customers make decisions between products that are in the same category. For example, a customer may visit your store to buy shorts, so they would head straight to the section that sells shorts and will be greeted with a range of options. They will identify the colours, materials and patterns that they like and hopefully make a choice from your selection by buying their size. Good assortment planning will reflect the CDT and help to steer the customer towards their eventual choice. This will not be a single solution that suits all customers, there will be many ways to arrive at a final decision.
- 4. Cross-selling: This is the art of selling complementary products to a customer based on their choices. This can also be utilised in assortment planning to ensure that customers who pick up an item to buy it, are also in proximity to a range of other products that would be of interest to them because of their purchase. If you’re unsure about which products might be complimentary, you can find sales reports from your ePOS to discover which products are frequently bought together.
- 5. Make the Most of Impulse Buys: This is a great way to increase sales with very little effort from you as the retailer. With some strategy from your assortment planning, you can find lower price items to place at strategic points such as high-traffic areas of the store and at the tills. You can also encourage impulse buys by adding additional promotions such as a BOGOF or time sensitive offers. Capitalising on ‘on trend’ or ‘viral’ items is another great way to drive sales. Finally, ensure that your sales team is recommending impulse items based on what’s in your customers’ baskets.
The Balancing Act
Although it may seem like a great plan to stock up on your best sellers and impulse buy items, it’s important to remember that assortment planning is very much more than this. It’s a complex web of factors that ultimately drive sales and continuing effort is required to get it right. Variety when it comes to product categories, price and what’s ‘on trend’ are just some of the factors that could change. It’s an idea to keep a level of consistency so that your loyal customers know what to expect with a varying range of items which might change depending on new trends or seasonal preferences. This is also the case for price points. Keeping in mind that when faced with high and low price points, a customer may be persuaded to opt for the mid price point but it’s important to offer the range to drive that decision-making.
Assortment planning is a critical aspect of retail strategy that can significantly impact a store's profitability and success. By carefully curating the products offered to customers, retailers can cater to their preferences, differentiate themselves from competitors, and drive customer satisfaction and loyalty. Assortment planning involves a deep understanding of customer demand, market trends, inventory management, pricing strategies, and competitive analysis. Implementing assortment planning techniques can help retailers attract more customers, increase conversions, and ultimately sell more. By striking a balance between consistency and variety in product offerings, price points, and trend responsiveness, retailers can create an assortment that meets customer expectations while driving sales and profitability. By leveraging assortment planning effectively, retailers can optimise their offerings, attract more customers, and ultimately achieve higher levels of business success in the competitive retail landscape.
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