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A great looking retail floor is important, but one that increases sales and profitability is better. Assortment planning is one way to maximize your retail floor to boost sales and support a positive customer experience.
Just as you use a collection of marketing tactics to “convert” customers, or get them to buy a product, visit your store or engage with your brand in some way, assortment planning helps you optimize your retail space for conversions, too. Here’s an introduction to assortment planning, and how you can use it to boost sales and profits.
Think short- and long-term
It’s easy to think that you’re doing your assortment planning by just staying on top of ordering and inventory, but it involves a lot more. Assortment planning maximizes your store layout, visual merchandising strategies, and product placement for a specific time period, and fuels the reasoning behind your product ordering and inventory efforts.
If you’re new to assortment planning, you can start by creating short- and long-term plans for the types of products you want in your store at specific times of the year. Let’s say you’re starting your assortment planning in early spring; you’ll want to know what your hot sellers are for spring and summer and what you’ll need for the fall and winter. Here are a few questions to ask yourself:
- Will those spring and summer hot sellers need restocking between now and the end of summer? If so, are plans in place to keep them stocked?
- For fall and winter products, are there times to purchase that offer better pricing or terms? What is the latest I can order these products?
- Which products do I need consistently, all year long? Do I have systems in place to execute orders quickly and easily for them?
Product types and layout
Chances are your retail store carries a wide range of products. Some might be sold year-round, others seasonally. For example, a clothing store may carry socks and underwear all year long, but swimsuits in the spring and summer and jackets in the fall and winter.
You will plan differently for items needed throughout the entire year compared to those needed for promotions or seasons. You can set a more permanent layout strategy and implement some product placement foundations that could work the entire year for certain basic items. Then weave in seasonal and promotional products around those layout foundations. Here are a few questions to ask yourself daily and weekly about your layout:
- If people shop for basics frequently, should I keep them in the back so they see other items on their journey? If so, does this strategy need to shift at certain times of the year?
- Do your seasonal hot sellers need to be on displays right near the front door? Or do they drive people to the store in the first place and can they be in the back? How does this affect a customer’s ability to get to the basic items they may buy regularly?
- Does your store have a perimeter layout to display a wide selection of products that don’t change much throughout the year? Does this layout strategy need to shift at certain times of year?
Width and depth
In assortment planning, the variety of product categories (shirts, pants, shoes, etc.) is called the “width” of products. Variations within a category, for example, the number of colors of a shirt, is referred to as the “depth” of products.
Once you decide on the width of product selection for a time period, you also need to consider depth. Review your sales data to pin down preferences to make the right depth decisions. If a certain product is popular in only a few colors or styles, prioritize those and minimize the less popular ones.
Remember, assortment planning exists to drive sales and profitability. So, you want to consistently ask yourself which products, seasons and promotions are the biggest cashflow drivers throughout the year. Data can be mined from sales history, but input and feedback from customers and sales associates can also help you choose the right products for the right time of year and place them optimally inside the store to nurture sales.
Serving multiple stores
You also want to make sure to pay attention to differing needs by region or location. If you have multiple stores, what are the specific needs of customers at each store? You will need to stock and arrange your products differently in each location. And if you only have one retail store, study competitors with more than one location to learn about different needs in your own locale. Consider the example below:
You own a skateboard/snowboard shop with locations in Colorado and Arizona. In Colorado, the snow-packed mountains are an hour away and the snowboarding season is longer than in Arizona, where the ski resort may require a few hours to drive to and customers there, as a result, snowboard less frequently. Both locations also sell certain shoes and clothing all year long as well.
The Arizona location, due to its mild weather, sells skateboards year-round. In Colorado, skateboards are a summer purchase only. In the Colorado location, however, you may count on six solid months of snowboard sales but only a few months in the Arizona store because the snowboarding season is shorter. Your product mix for both stores may include the same width, but depth and inventory volume and the timing of orders will all be different.
Store layout strategies will likely be different, too. In Arizona, if skateboards are the dominant sale, they might be on retail displays in the back. One store could also sell more clothing, so clothing racks may be more prominently displayed throughout the store than in the other location, which may prefer to allocate more floor space for shoes or snowboards.
Don’t forget the check-out experience
Check-outs are an increasingly important area of a store layout. Knowing how your customers want to check out and what complementary products they prefer on their checkout journey are keys to boosting sales. Here are a few important questions about check-outs to consider:
- What is the best location for checkout? Front or back of the store?
- How should your checkout stand appear? A large, flowing cash wrap with a lot of product around it? Or do your customers prefer a swift checkout and small area off to the side?
- Should your checkout be in the middle of your store as a centerpiece to allow you to continuously engage with customers?
- Might customers prefer mobile checkout to avoid lines? Can you empower sales staff to check out customers with hand-held devices while they help personalize their journey?
Assortment planning is key to retail success
Your assortment planning strategy will shift with your customer’s evolving needs, and your plans will involve regular check-ins and updates. You’ll want to assess long- and short-term plans as often as you need to. It can be weekly, monthly, quarterly—whatever is best for your retail business. And if you need help with your merchandising or store layout, contact a shopPOPdisplays expert today!