What is an assortment strategy?
Retail assortment strategies include the number and types of products that stores display for purchase by consumers. Also known as an assortment strategy, it is a strategic tool that retailers use to manage and increase sales. This strategy consists of two main components:
- The depth of the product offered, or the number of variations of a particular product that the store is dealing with (for example, the number of sizes and flavors of the same product).
- The width of the product, or the number of types of products the store handles.
- Assortment strategy is a strategic retail industry sales tool that optimizes the variety of products for sale.
- This strategy revolves around the concepts of “rich assortment” and “wide variety”.
- The product assortment strategy started in the context of a physical store, but has since been successfully carried over to the e-commerce platform.
Assortment strategy mechanism
Basically, a product assortment strategy is a retail industry sales tool centered around the concept of depth and width. However, not all retailers can use both components of this strategy at the same time.
Assortment strategies can include many layers of sub-strategies and related strategies, as each store needs to adjust its strategy to meet its own specific needs and goals.
A rich assortment of products (as opposed to a narrow assortment) means that retailers are dealing with different variations of a single product. A wide variety of products (the opposite of narrow variety) means that retailers carry a large number of different types of products.
Assortment strategies are not a panacea. You need to customize it to accommodate your business parameters.
Challenge to a small store
Retailers face trade-offs when deciding on an assortment strategy. Choosing both a wide variety of products and a large assortment at the same time requires a lot of space and is usually reserved for large retail stores.
In stores with limited space, you can choose to specialize in a particular type of product and offer different colors and styles to your customers. Other stores have a large selection, but the variety is limited. For example, one of the reasons 7-Eleven (closed since 2005) has only one brand of canned cat food is that Kroger (NYSE: KR) is likely to have it. Space to stock canned cat food from 12 brands as needed.
Physical store terminology
Originally, the assortment strategy referred only to physical stores. This is because the depth and breadth factors of strategy have a lot to do with the physical space and the visual and tactile interactions between consumers and products. But these days, all sales locations (in-store, click-and-mortar, e-tailing) are using a variety of strategies to gain a competitive advantage.
Retailers can fine-tune their assortment strategies to target consumer demographic profiles by grouping items that are likely to appeal to a particular type of customer. For example, if a retailer wants to attract new parent customers, they can fill the shelves with trendy branded toddler apparel, along with toys, bedding, and other products that new parents need.
Strategic sales tools
The strategically placed assortment of merchandise allows customers to upsell customers with supplemental items when searching for items that come to the store.
Strategically grouping related items is a common way to stimulate impulse purchases, whether they are essential or not.
- Placing a garden hose near sprinklers and other lawn care products allows retailers to drive more cars into their customers’ baskets. Similarly, installing a luxurious patio dining set with attractive outdoor tableware and bar accessories in the middle of more flashy garden care products can even send customers in a hurry to the household items section of the store. I can do it.
- A flashlight (or battery-powered product) presentation can include a display near the battery required to use the product. Alternatively, the manager can place batteries near the checkout counter to remind customers that the flashlight will not work without batteries before leaving the store.
Potential Disadvantages of Assortment Strategy
The depth of the product assortment may help attract customers, but there are some caveats to relying solely on the assortment strategy. If the assortment of merchandise is misplaced, the demand for these merchandise can fluctuate significantly.
For example, if less popular items are mixed with popular items, it can make popular items less attractive. Or, too many assortments can make it difficult for customers to find the item they are looking for. Overwhelming shoppers with too many purchasing options can be counterproductive and hinder customer involvement.