Making the most of product assortments

It’s common knowledge that product assortments need to be tailored to individual locations. What’s strange to me is how few retailers do this well. Obviously there is a cost associated with doing this, as well as a need for analysis to understand when to make changes to an assortment. It’s very easy to find a product, test it for a limited time, and then roll it out to most or all of the locations in a company. Too often, there is little or no follow-up to see if the product truly performs in all these locations. The result is often outdated assortments, stranded inventory, returns and markdowns, and discontinued product sitting on the shelves.

In my experience a large part of the answer here is in a rigorous product life cycle program. As very few products are truly permanent, it pays to know when to get out of an old product – even if it is performing adequately – in favor of a newer product that better serves your customers. There needs to be a plan for getting into a new product, as well as a strategy for getting out of it at the right time. I know of several companies that won’t allow new products to be set up until there is a life cycle plan in place that includes the product’s initial rollout dates and plan, as well as a date and plan for when the item will be phased out.

This kind of planning requires product knowledge, demographic data and product performance data. It also requires a commitment to ongoing monitoring of products and programs throughout the company, together with a willingess to make the hard decisions required to get out of a product before it is dead. This is particularly true with perishable products.

In my experience most of the profit from selling a specific product comes from having it in the correct assortment where the demographics and other skus in the assortment work together to satisfy customer needs. Spreading product evenly around the company rarely produces the kind of results we want.

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  • Grady  On January 8, 2015 at 11:42

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