Product assortment plays a crucial role in retail operations by ensuring the availability of the right mix to meet customer demand while maximising profitability.
Assortment management plays a key role in inventory management, pricing, demand forecasting and shelf management, as it helps retailers minimise excess inventory and reduce the risk of stockouts.
One of the main challenges from a financial and budgeting perspective is balancing the budget effectively between regular assortment sales and personalised and regular promotions, without cannibalising each other.
Retailers need to adopt a data-driven approach to understand specific customer segments and communicate effectively with them.
Equally important is ensuring internal coordination throughout the entire assortment and promotional management planning cycles, as well as among the planning teams themselves.
Understanding customers is a multi-faceted process and some essential components that a retailer needs to manage to make effective assortment decisions include:
- Getting a single view of the customer
- Understanding customers through main behaviour patterns
- Retaining the most valuable customers
- Using customer insights incrementally to the existing sales metrics
- Enhancing customer understanding through customer decision trees
- Demand transferability, cross-sales and cannibalisation to predict shifts in demand patterns
It is very difficult to orchestrate all the information, insights and structure, analyse it, and re-use it for assortment management and decision-making processes.
It is mostly impossible to take all the factors into the planning processes, and completely impossible to scale and roll it out to the whole business, without digital instruments and tools to support it.
There are different types of analytical and planning tools on the market, but just a few provide a holistic process, as well as synchronised regular, mass promotion, and personalised promotions assortment management.
Business solutions should enable not only transparent data management and data exchange for the assortment planning steps, but most importantly, IT tools should support a seamless and comprehensive category management planning process and proactive collaboration between all involved departments and participants.
To learn more about modern instruments and business applications that can support a holistic category management process, write to Consulting For Retail at [email protected].
Consulting For Retail is an authorised partner and reseller of Num8erz – a fully integrated assortment planning platform.
Read the full story on C4R's website.
This article was written in partnership with Consulting For Retail.
