You can also use a planogram, which is a detailed drawing of your store, layout, retail merchandising displays, and product placement. Planograms are also used to maximize profitability. Some great planogram software options include:. While assortment planning is best for larger retailers with merchandising teams and bigger budgets, the principles apply to any retail environment. Consider these tips when planning your assortment:. Begin by setting goals to hold yourself and your team accountable, as well as evaluate progress over time.
Examine your historical data to understand which goals are reasonable and which products you need to include in the mix. Understand product hierarchy and how customers arrive at the purchase decision, and incorporate that into your assortment planning. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall.
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Free Trial. Free Trial Contact Sales. Events Tips Updates. Home Inventory Management. Recommended Articles. Going back to the shampoo example, menthol shampoo may be great in summers, while winters call for strong scents or even dry shampoo. It is very tempting to choose vendors who offer very competitive prices, but is that the only aspect you look into? As you begin to make consistent sales, product quality will begin to play a major role.
The better the products are, the lesser returns you receive and the more trust is built in your brand. When choosing a seller, be sure to evaluate an entire batch of products sent by them.
Would you buy them? Also, for vendors outside your country, consider how long the demand fulfillment time will be. A standard demand time lets you sell without worry. Using a vendor management system is also recommended. It may seem like a lot to keep track of manually, so vendor management systems can give you a clear picture of orders that you have raised and are pending delivery.
Some intuitive systems can also alert you when stocks are low, and send a purchase order to vendors when this happens. Know Your Competition. Competition can be both inspiring and exhausting. Once you have chosen what products to sell, evaluate the competition, both in online marketplaces and stand-alone web stores. In almost every category, there will be brands that are well-known. We are not trying to replace them. Instead, we are trying to eat a chunk of the pie, and perhaps replace those retailers who are unable to deliver on their promises.
Observe how other retailers in your product category are functioning. Have they used the omnichannel approach to their advantage? Do they have a message that resonates with their audience? Also, study those who are on the brink of failure.
What did they do wrong? Most product retailers fail to maintain a consistent supply chain, thus leading them to too much or too little inventory. Investing in a good inventory management software when you begin can save you a world of pain in the future.
Ensure that the products you have chosen have enough demand to sustain several market players at a time. Observe sales trends for different products over time, removing those that may not be selling too well. And remember, your product assortment does not have to be constant all the time. You can swap the slow-moving inventory with products having greater demand.
You can also add new products to the assortment as you begin to feel secure. Also, you can choose to enter into a new product niche too.
Choosing your product assortment is a continuous process. Originally, assortment strategy referred only to brick-and-mortar stores because the strategy's components of depth and breadth had a lot to do with physical space and the visual and tactile interaction between consumer and product.
Recently, though, all sales venues—brick-and-mortar, click and mortar , and e-tailing —have used varieties of the strategy to gain competitive advantage. By grouping together items that they believe will appeal to certain types of customers, retailers may fine-tune their assortment strategies to target consumers' demographic profiles. If a retailer wants to attract customers who are new parents, for example, it might fill the shelves with infant apparel from trendy brands, along with toys, bedding, and other products new parents need.
A strategically arranged product assortment can upsell customers on supplemental items as they search for the item that brought them to the store. Grouping related items together strategically, whether or not they are necessities, is a common way to stimulate impulse buying :. Although the depth of product assortment may help attract customers, there are certain caveats to relying only on an assortment strategy. If items in an assortment are placed incorrectly, the demand for these products may vary drastically.
If less-popular items are mixed in with popular items, for example, they could detract from the more-popular items' appeal. Or, if the assortment is too vast, customers may have difficulty finding the item they are seeking.
Overwhelming shoppers with too many buying options can be counterproductive and discourage customer engagement. Tools for Fundamental Analysis. How To Start A Business. Company Profiles. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. Most specialty retailers have deep product assortments.
For instance, a store that specializes in office supplies can stock the same type of pen but in various colors. Wharton School of the University of Pennsylvania sums it up quite nicely :. But there are a handful of general guidelines and pointers you should consider when coming up with the right product mix.
The first step to having an optimal product assortment is to recognize who you are and what your brand means to your target customers.
Pondering these questions will help you determine the right product breadth and depth to implement. Its deep product assortment. For instance, gift shops that attract everyone from lone travelers to families and even local shoppers should stock various product types, like key chains, clothing, toys, mugs, etc.
Hint: the owners use both their intuition and data. Failing to get this right may confuse or alienate your shoppers. If your best customers love a deep assortment and you suddenly go wide and start stocking things outside your core categories, you could send shoppers packing.
While sales and inventory data are most useful for deciding how many units to order and stock, they can also contain nuggets of information that you can use in your product assortment strategy. For example, if merchandise from a particular brand or designer keeps selling out, you may consider expanding your range with more products from that designer.
Or if you find that shoppers are purchasing different colors or sizes of a particular product, you could take that as a sign to deepen your range and stock even more variants of that item. You should also pay attention to how people behave in-store and online. Which products do they explore most?
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