In the ever-evolving world of retail, success hinges on various factors, but one stands out: retail assortment planning. This process involves choosing and managing products for sale in a retail store. Getting assortment planning right can make a massive difference to a retailer’s profits, customer satisfaction, and market competitiveness. In this article, we’ll explore retail assortment planning, why it’s crucial, and strategies to make it work, using a skincare company as an example.
Why Retail Assortment Planning Matters
Retail assortment planning goes beyond deciding what to put on store shelves. It’s about matching your products with what your customers want while keeping inventory in check. For instance, consider a skincare company that specialises in skincare products.
1. Customer Focus: It starts with understanding your customers’ skincare needs. Are they looking for anti-aging solutions, acne treatments, or everyday skincare routines? Knowing this helps you offer what they want.
2. Smart Inventory: Having the right skincare products in stock is essential. Too much or too little stock can hurt your profits. Assortment planning helps you balance stock levels to avoid losses.
3. Competitive Edge: In a crowded skincare market, offering unique and well-suited products can set you apart. Your customers may be looking for cruelty-free, organic, or dermatologist-recommended options.
4. Trends and Seasons: Skincare trends evolve, and seasons affect skincare needs. Assortment planning lets you adapt your product mix to stay relevant year-round. For example, offering sunscreen in the summer and hydrating products in the winter.
Breadth and Depth in Assortment
Two critical aspects of assortment planning are breadth and depth:
Breadth: This is about how many different types of skincare products you offer. The skincare company may include cleansers, moisturizers, serums, and sunscreens in its product range.
Depth: This is about how many choices you provide within each skincare category. Within the cleansers category, you might offer options for sensitive skin, oily skin, and dry skin, catering to a broader customer base.
Finding the right balance between breadth and depth is essential for the skincare company’s success. Here’s why:
Balancing Breadth and Depth
The choice between breadth and depth depends on factors like:
- Customer preferences (Do they prefer a wide range of products or many options within a category?)
- Emerging skincare trends (Are customers looking for specific ingredients like hyaluronic acid or retinol?)
- Shelf space (Physical stores need to make the most of their space.)
- Competition (What skincare products are competitors offering?)
- Costs and profits (Can the company afford to stock a vast range of products?)
- Inventory management (Avoiding overstocking or understocking is critical.)
- Supplier relationships (Reliable suppliers ensure a consistent supply of products.)
Strategies for Great Assortment Planning
Our skincare company can shine by using these strategies:
1. Master the Merchandise Plan: Set budgets for seasonal skincare products, providing clarity on spending limits.
2. Use Historical Data: Learn from past sales data to make informed decisions about what skincare products to stock.
3. Customer-Centric Approach: Tailor your assortment to your customers’ skincare needs and preferences.
4. Pick the Right Planning Model: Choose the assortment planning model that aligns with your merchandise plan, whether it’s offering a wide variety or deep options within each category.
5. Cluster for Simplicity: If you have multiple store locations, group them based on factors like size, sales volume, or regional preferences to make planning more manageable.
6. Balance Staples and Trends: Offer both tried-and-true skincare products and emerging skincare solutions to cater to different customer preferences.
7. Embrace Local Artisans: Include products from local skincare artisans or those with unique ingredients for a distinctive touch.
8. Cross-Merchandise Strategically: Pair complementary skincare products to enhance the customer experience. For example, offer serums alongside moisturizers for a complete skincare routine.
9. Encourage Impulse Buys: Showcase appealing skincare items, such as face masks or travel-sized products, near checkout counters to boost sales.
Technology that can assist in Assortment Planning
Leading skincare companies use technology for an edge:
- Demand Forecasting: AI predicts skincare trends and helps adjust stock levels accordingly.
- Assortment Planning: AI assists in simulating assortment scenarios for better decision-making.
- Supply Chain Management: AI ensures a steady supply of diverse skincare products.
- E-commerce Platforms: Online retailers use technology to offer a wide range of skincare products 24/7.
Balancing breadth and depth in the skincare industry boosts variety, attracting customers back. Achieving this balance, a must in today’s skincare retail, relies on modern technology, especially AI-based analytics:
- Demand forecasting
- Assortment planning
- Supply chain management
- E-commerce platforms
In today’s competitive market, mastering this balance is the key to retail success and I hope this article will get you started in the right direction.