The business of retail comes with a lot of things to manage. Right from being present at the right location and cater the right customers to making available stocks to organizing the retail shelves to attract the customer and run schemes and offers to attract different customers, the retail business gives knowledge of everything.
Of the many challenges, one of the biggest that retailers face is analyzing the trends and identifying the products that the customers may buy for the particular month or season and have the stock ready accordingly. This is also known as assortment planning.
Definition: Retail assortment planning is defined as planning of the right quantity of stock for the right month or season for the right customers.
It is very important for the retailer to pick the right product for the right season and then order the required quantities so that the retailer is not overstocked or understocked.
It is estimated that more than one trillion dollars of the total retail economy are wasted because of overstock or out of stocks, which is why proper Retail Assortment planning is all the more important.
Factors affecting Retail Assortment Planning
Retail assortment planning is something which gets affected by multiple factors.
Thus a retailer has to consider these factors before ordering any stock. Although there is the new software that is coming up, which help with retail planning more often than not, the retailer does the planning on intuition and the business experience that he has gained over the years.
Primary factors affecting retail assortment planning are the month or season, Suppliers, Shelf Space, and Market Trends.
This is perhaps one of the most crucial factors which affect assortment planning. Every month or every season, customers need different things.
For example, during summers the sales of deodorants talcum powders will be high, but during winters the sales of lotion cough drops over the counter medicines will go up while the sales of things that were being used in summer will go down significantly.
Factors that festivals anniversaries and birthdays also affect the sale of particular products. It is important that the retailer understands the surroundings that he is operating in and buys the stock and plans the assortment accordingly. To know this, the retailer has to have little foresight of the factors that may affect or are coming soon so that he can have the stock ready.
For example, during the election the retailer can have different caps with different slogans printed on them in order to sell them to the people following elections or during the game season, British stock up with the items that could sell in a game like a large hand glove to wave in stadium, pens for autographs etc.
Different months also affect the sales for example in case of February the sale of greeting cards increase or even during different days, like Mothers day, Fathers day, etc., the retailer should ensure that he is an appropriate greeting card for the appropriate occasion.
The retailer obviously is the last man in the retail chain. It is the middleman for the stockist who supplies the goods to the retailer. Although not every detail depends on stockist or a middleman, most of them follow the same pattern.
It is the suppliers who supplied the product to the retailers, and a retailer should always know his suppliers. Depending on the location of the retailer, there were multiple suppliers home maybe catering to his area. However, the price of every supplier will vary and also the service along with it.
It is very important that the retailer chooses a supplier carefully so that the supply of the product is uninterrupted and all the products which are required are made available.
Remember multiple scenarios in case of a supplier like there may be multiple suppliers, but only a few of them would have the required stock and assortment, and also fewer of them would provide the proper service to the retailer.
Another scenario there may be very few suppliers, and the retailer will have to compromise and work according to the terms of the supplier. In any of these scenarios, price plays an important role. The retailer will go with the supplier, who has the best price, the fastest service, and availability of different products and their variants.
#3 Shelf space
Another important factor in case of assortment planning is the available shelf space with the retailer.
There may be multiple suppliers with a various assortment of various products and also it may be the right month to buy the products for sale, but if the retailer does not have enough shelf space, he would always have to keep on asking for multiple deliveries.
The available space in the shop of the retailer will determine the maximum stock that could be taken by the retailer. The retailer will have to utilize that space to the best of his capacity and make available multiple variants of multiple products but in small quantities so that he can serve most of the customers to the best of his ability.
#4 Market Trends
Another most crucial factor of retail short while planning is to keep into consideration the market trends. The trends in the market affected by multiple factors like the current celebrities, market potential, paying capacity of the people, and liking of the people. Pop culture also plays an important role to affect the market Trend.
For example, currently, health food is one of the trends in the market, which is why the retailer should ensure that he has health supplements for health food, sports equipment to meet the customer demands.
A popular movie or TV show, which has influenced people for a long time, also affects the market Trend. For example, during the release of Star Wars, most of the people want associated accessories of the movie for recently during the finale of Game of Thrones many people bought many accessories of Game of Thrones and its related characters.
That is why pop culture also plays an important role in affecting the market trend, which affects retail assortment planning.
Importance of Retail Assortment Planning
#1 Serving Customers:
When the retailer has the right assortment planning, he will be able to assist the customer by fulfilling his needs in an appropriate way. You will also be helping the customer but not searching for it beyond his Store and thereby giving customer convenience more priority.
A good retail assortment planning will help to attract more and more customers of different tastes to the same shop.
#2 Retail Budget:
Importance of retailers assortment planning is it helps to manage the retail budget accordingly. The retailer cannot buy every product of every size color and combination to keep in the store, hoping that some customer might walk in and take it.
Instead, the retailer can keep the regular sizes, their colors and varieties of the products that are most demanded or commonly used and the exceptional sizes and their variants and colors on-demand basis. Examples in case of apparel retail store, the retailer can keep the regular size of shirts that are used commonly by most of the man, but the extreme sizes can be ordered and given on-demand basis.
This will ensure that most of the customers are created with regular sizes, and the other customers with exceptional sizes are not left out. This weather can plan a budget in order to purchase the stock and maintain it accordingly without overshooting the budget and overstocking the retail store.
#3 Avoiding losses:
With proper planning, the retailer can avoid the process of stock, which cause financial losses to the retailer. The business acumen of the retailer interested in retail assortment planning and the better the business acumen the rover will be the wastage of the stock.
The 4 Pillars of Assortment Planning
Four pillars of Retail Assortment Planning are Customers, Employees, Technology, and Sustainability.
#1 Customers and their demands
Almost all of the retail business is based on the demands of the customer. And the retail assortment planning is based in its entirety on customer demands. It is important that the reader analyses the demands of the customer, and plans are the retail assortment accordingly.
The retailer can take help of his own experience the trends in the market or any other factors which affect the assortment planning and also the factors which influence change are varied the demands of customers. The retailer has to upgrade himself or change according to the need on the market as well as according to the demands of the customer.
While one-half of the retail businesses customers, the other half is employees. It is important that the retailer keep their employees happy, so they serve the customers happy.
Retail is not only about buying but also providing service while buying the products, and this is very employees come into the picture. If the employees are satisfied, they will ensure that customers are satisfied with their experience in the retail store.
#3 Process and Technology:
The retailer should always ensure that the process of buying is customer-friendly and easy. Incorporation of Technology is common in almost every retail shop. Use of swipe machines self-service checkout kiosks and instant receipt generator are very common in almost every retail store.
Using software as Oracle has also become common major retail supermarkets. Most of the software has also come up with a data collecting system which helps the retailer to analyze which customer is a regular customer and which customer spends more on a particular type of grocery.
This helps the retailer to send promotional messages and arrange for campaigns accordingly. This also helps the retailer to understand the buying pattern of customers and arrange for retail assortment accordingly.
Over and above, all of these pillars is an important pillar of sustainability. Order to sustain the retail business should have a long-term vision and focus on customers priority as well as market trends in order to to be the best of the retail store in the neighborhood.
Where is there has to ensure that the processes right from buying a particular item checking out the buyer should experience others properly designed process?