Product Assortment Strategies: Demand and Profitability￼
The variety of products that a company or store provides to clients is referred to as product assortment or product mix in the retail industry. Choosing a quality product is not an easy task. You run the danger of having a lot of dead stock if you carry a large variety of products. However, if your product selection is too limited, you risk failing to match client needs and losing those opportunities. The finest product selection may improve client satisfaction and sales.
- Product Assortment Components
- Product Assortment Strategies
- Product Assortment Challenges
- Tips to Optimize Product Assortment
- What is product assortment in retail ?
- List some product assortment example ?
- Why is finding the right balance between product width and depth important in assortment design?
- How does seasonality impact product demand and supply, and what are trends in this context?
- What challenges does a business face in planning and managing its product assortment?
- What are some tips and strategies for optimizing product assortment, considering factors like supplier selection and inventory management?
Product Assortment Components
|Number of product lines a business carries
|Automaker producing cars, SUVs, trucks lines
|Number of items within a specific product line
|Automotive manufacturer: 4 sedans, 3 SUVs, 2 trucks
|Number of variations within each product line
|Car company offering basic, standard, and luxury models within each line
|Degree of relatedness between different product lines within the mix
|Indicates how closely product lines, such as cars, SUVs, and trucks, are related to each other
Product Assortment Strategies
A method called product assortment lets businesses choose which goods to stock and promote across all of their channels. An effective assortment plan must take into account a wide range of factors, including a retailer’s identity and vendors, as well as shop capacity, customer demand, and profitability. Evaluating the trade-off between a deep selection and a large assortment is one aspect of this method.
|A large number of categories with fewer product variations within each.
|Hypermarkets offer groceries, clothing, electronics, and more.
|A smaller number of product lines but with a greater product variety. Attracts a loyal customer base.
|Specialty running stores with various options for runners.
|Tailor’s product mix is based on the store’s location, adapting to local community needs.
|Clothing stores with different assortments for regions with varying climates.
|Appeals to broad demographics with extensive product categories and variations.
|Retail giants like Walmart and Target offer a wide range of products.
|Offers products outside the core focus to attract new customers.
|Grocery stores sell electronics, books, toys, and clothes alongside groceries.
Product Assortment Challenges
- Finding the ideal balance between your product range’s width and depth is one of the key problems of product assortment design.
- While depth refers to the amount of variations or alternatives you offer inside each category or kind of product, breadth refers to the total number of product categories or types you offer.
Seasonality & Trends
- Managing the effect of seasonality and trends on your product demand and supply is another difficulty in arranging your product selection.
- Seasonality describes the cyclical changes in consumer seasonal demand brought on by the weather, special occasions, or the changing of the seasons.
- The popularity and importance of particular items or categories are affected by changes in consumer preferences, tastes, or fashions business, which are referred to as trends.
Planning Product Range
- Planning your product range faces a third challenge: adjusting to the input and unpredictable behaviour of your clients.
- For the purpose of developing your product assortment, consumer feedback and behaviour are important sources of data since they let you know what your customers need, want, enjoy, and hate about your items.
Planning Product Assortment
- Planning your product assortment might be difficult, but you can make the best choices with the aid of technology and tools.
- In order to provide forecasts or suggestions, data analytics and artificial intelligence may gather, process, and analyse data from several sources.
Managing Large Inventories
- Large inventories may be challenging to manage, and if your company attempts an overly ambitious product lineup, you can find yourself inundated with the sheer number of things that need to be stored, replenished, and delivered.
- Small businesses and brands must carefully consider the product assortments that their infrastructure and business strategy can handle.
Tips to Optimize Product Assortment
Optimizing Assortment with POS
- Understanding your target market’s wants is the first step to optimising your product selection. Retail shops may gather all customer and inventory information from all sales channels with a sophisticated POS system.
- Additionally, the system aids in the generation of POS data analyses that display your consumer insights, best-selling goods, sales patterns, etc. The depth and breadth of the product assortment may then be chosen.
Supplier Selection Impact
- The optimisation of the product assortment also depends on selecting the proper providers.
- When your suppliers can’t provide enough goods on time or give you low-quality goods, which result in sales losses and damaged customer relations, a bad supply can interrupt your business operations.
Inventory Analysis Insights
- You can determine what is selling and what is not by using inventory analysis. You may then use that information to decide if you need to narrow or widen your assortments.
- You may make a better choice about your product mix with the aid of an accurate and timely report from POS software.
Loss Leader Strategy
- Offering a product at an unprofitable price in order to draw in new customers or upsell to current ones is known as a loss leader approach.
- Staples are items that customers commonly purchase out of necessity rather than want. Examples of staples include diapers, laundry detergent, and shaving cream.
- To get more people into your business, this product selection approach focuses on broadening and deepening your product diversity. It also aids in extending the size of clients’ baskets by adding more profitable and pertinent goods.
Seasonal Product Mix
- You should take the seasons into account while choosing your product combination.
- Depending on the season, you might need to broaden your selection in certain categories while limiting it in others. It would be beneficial to select a product mix that is appropriate for the various seasons and client expectations.
You run the danger of having a lot of dead stock if you carry a large variety of products. The finest product selection may improve client satisfaction and sales. A method called product assortment lets businesses choose which goods to stock and promote across all of their channels. Managing the effect of seasonality and trends on your product demand and supply is another difficulty in arranging your product selection. Understanding your target market’s wants is the first step to optimising your product selection. Retail shops may gather all customer and inventory information from all sales channels with a sophisticated POS system.
What is product assortment in retail ?
The variety of products that a company or store provides to clients is referred to as product assortment or product mix in the retail industry.
List some product assortment example ?
Supermarket, Clothing Store, Bookstore, Sporting Goods, Beauty Store, etc.
Why is finding the right balance between product width and depth important in assortment design?
Balancing product width (number of categories) and depth (variations within categories) is crucial to meet customer needs effectively. Too much width may lead to dead stock, while too much depth may limit options.
How does seasonality impact product demand and supply, and what are trends in this context?
Seasonality influences consumer demand based on weather, occasions, or changing seasons, while trends reflect shifts in preferences, tastes, or fashions, affecting the importance of specific product categories.
What challenges does a business face in planning and managing its product assortment?
Challenges include finding the right assortment balance, adapting to seasonality and trends, and considering customer feedback and behavior.
What are some tips and strategies for optimizing product assortment, considering factors like supplier selection and inventory management?
Utilize POS systems for data analysis, choose reliable suppliers, conduct inventory analysis, and consider loss leader strategies and seasonal product mixes to optimize assortments.