Your product is the highlight of your retail business. What you sell converts to revenue and net profit for the brand. To build a viable product assortment, you need product checks and inventory management to attract customers, allowing you to compete in the saturated retail industry.
Let’s analyse the assortment process in detail.
Product Assortment – An Overview
The number and types of products a business sells indicate the range of product assortment. In other words, the variety of product lines and categories sold to users. Big competitors like Amazon sell clothing, groceries, furniture and other items.
Assortment in retail is a key strategy to thrive in the competitive eCommerce space. It is a strategic tool retailers use to manage and increase sales. Here are the basic components of product assortment.
- Product Line – This is the group of related products sold under a common banner or name. For example, a cosmetics brand may have skincare and beauty products under a common category.
- Product Line Width/Breath – The total number of product lines a company offers to their targeted users.
- Product Line Length – The combined length of products within all product categories.
- Product line Extension – Adding newer product launches to the existing lines.
- Product Line Consistency – The calculation of product lines based on their distribution, end cycle, and supply channels. The merchandise assortment is critical to ensure smoother consistency in the product cycle.
- Product Line Depth – Each product has multiple variants. For example, various moisturisers cater to different skin types.
Let’s understand how retail assortment strategies work.
Product Assortment – Key Strategies Explained
What is assortment in retail? A strategy is a sales tool to utilise the depth and breadth of concepts in the product lines. A deep assortment means analysing all related categories to match your company’s particular goals. Let’s explore the top 5 strategies of product assortment.
1. Scrambled Assortment
It is a strategy offering fewer products outside your core product circle. You are trying to gain the attention of new customers by bringing subtle changes to your brand’s primary focus. Offering additional items to new users is done to increase sales and build brand awareness.
In other words, scrambling your product assortment offers flexibility to shoppers to purchase miscellaneous items outside their shopping list. For example, a buyer visits your store to purchase yoga mats but is also interested in buying headphones, allowing you to increase sales and retain the customer.
2. Deep Assortment
Using a deep strategy, companies limit their product niche but offer a variety of products under a particular category. These businesses sell to specific audiences eliminating the need for mass appeal. Many luxury and high fashion brands implement deep assortment to retain product quality.
They focus on customer satisfaction, enhancing quality, price, and features. While they sell fewer products, they cater to different interests and preferences across users.
3. Mass Market
This strategy targets users across all demographics and preferences and the product assortment cycle is both wide and deep, allowing businesses to offer a broad range of products in all categories. (Think Amazon and Walmart)
In each category, customers view hundreds of product variations, giving them wider choices in all segments. Mass assortment clocks significant revenue but is equally hard to maintain. Inventory management takes a backseat if distribution and order fulfilment channels fail at a critical stage.
4. Local Assortment
Smaller stores and brands looking to capture customers in a particular location use smaller product assortment strategies. This means the store will change its products based on user demands of a specific region. Factors such as culture, traditions, events, and climate affect customer choices.
5. Wide Assortment
Imagine it to be a shorter version of a mass market strategy. Although products are offered across multiple categories, the variations are less. Users can meet their buying needs in a single store – an all-in-one package.
Next, let’s understand the product assortment challenges faced by modern retailers.
Product Assortment – Key Challenges in 2024
Assorting a wide range of products isn’t a cakewalk. Multiple obstacles stand in your way to optimise your business operations. Here are the major issues cropping up in 2024.
1. Retrieving Accurate Data
Product assortment relies on accurate data including market dynamics, customer preferences, sales data, and industry trends. Proactive execution starts with accessing crucial information and planning. Without reliable data, retailers make decisions that backfire in the long term.
Obtaining and analysing data is critical to making decisions that align with market demands and forecasts. Many small and medium enterprises lack the resources to implement analytic systems to track data.
2. Scale and Diversity
Every retailer likes stocking various products across multiple categories, however, it may not match your business. Maintaining inventory is tough, and if your company attempts ambitious product assortment strategies, the business model may collapse due to repeated stocking, restocking, and fulfilment.
Conduct a SWOT analysis of your business infrastructure and carefully consider the strategies you want to implement.
3. Workforce Management
Imagine a big brand implementing deep product assortment strategies. They are diversifying their offer to enter newer market spaces, requiring additional workers to handle the inventory at a detailed level. This tiptoes into high operational costs, creating challenges for retailers to embrace speed and agility.
Redundant hierarchies cause a slow, gradual death of your business. If your teams can’t handle the sorting, picking, packing, and SKU proliferation, quick fulfilment and delivery become a hassle. Partner with a 3PL to store inventory or hire workers at all distribution channels to mitigate labour crunch.
4. Overstocking
High-volume product assortment is bad. You may accumulate more inventory than you can handle, leading to issues like carrying costs, deadstock, and supply-demand mismatch.
An inventory audit is a terrific way to eliminate overstocking. Examine inventory performance periodically to catch potential deadstock and identify slow-moving SKUs to remove them from your product lines. Next, invest in profitable items that are picked, packed, and shipped in less time. This allows you to decrease holding costs and manage the assortment hassle-free.
Now, let’s look at the impact of product assortment strategies.
Assortment – The End Result
Deep merchandise assortment offers innumerable end benefits. Here are a few listed below.
- Brand Value and Positioning – A diverse and well-curated product collection cements the brand as a major industry player, differentiating you as a premium service provider.
- Customer Loyalty – Offering products to meet the diverse needs of customers attracts value to your brand. Users appreciate the convenience of finding multiple items in one place, enhancing satisfaction.
- Sales and Revenue – Brand assortment encourages users to buy additional products boosting sales. Your company attracts a broader customer base by targeting different segments.
- Economies of Scale – A large variety of products entices the crowd to bulk purchase items, thus, reducing cost per unit. Include high-margin items in the assortment to boost profitability.
Finally, let’s address the commonly asked queries to gain conceptual clarity.
FAQs: Product Assortment: Meaning, Strategies, and Challenges
What is assortment and product variety?
Assortment means different products under a specific category while variety refers to different categories the retailer offers.
What is product assortment in retail?
This is a strategy to optimise the different categories of products for better display, sales, and customer satisfaction.
What is assortment in FMCG?
These are strategies to determine the optimal product mix in your daily inventory. It is critical to gauge industry trends for predicting customer behaviour and offering what they prefer to purchase.
Conclusion
The product assortment is a regular process to clear over and understocking problems and prevent SKU accumulation. A robust inventory signifies a healthy business model sustaining customer expectations. Feeling lost in the chain of inventory solutions? Fret not, Qodenext offers end-to-end inventory tracking, visibility, and fleet management solutions for efficient supply chain models. Get in touch to resolve your inventory challenges today.
