The hazards of a poor product assortment

A category’s product assortment defines what the retailer wants to be known for,  a wide selection of better-for-you products, organic, plant-based, local, fresh, etc. Merchandising the right assortment of products is critical to creating happy, satisfied, loyal customers.  You want to make sure that your store has the right variety, selection, and quantity of products to meet the needs of your shoppers?

The majority of projects I do for retailers and brands focus on category product assortments. In each project I find a lot of assortment voids in the category in both the store and in the market. These voids equal lost sales which account for disappointed shoppers and tens of thousands of dollars lost per category.

Savvy retailers want and need to differentiate themselves from their competitors. Effective merchandising and the category product assortment is how they accomplish this – especially with the help of natural, gluten-free, organic, plant-based, allergy friendly, products. Natural retailers are where shoppers tend to see new healthy product trends. Lost sales due to out-of-stocks and poor merchandising equal a huge missed opportunity for natural retailers to capitalize on innovative new product trends. These missed opportunities encourage consumers to shop your competition when they can’t find what they are looking for.

Most natural retailers stock between 5,000 and 30,000 items (SKU’s). They select the products they carry from potentially several hundred thousand available items.  It's unrealistic to expect a retailer to be an expert in every category and in every item their store sells including what’s being sold by their competition. Large retailers struggle with this also – including those in mainstream. The best strategy for a store to effectively manage its product assortment is to partner with the brands they sell. 

The biggest mistakes I see retailers and brands make is relying solely on the canned topline reports like the Pareto curve, an item ranking reports, and other generic reports.  While these reports are a great starting place for analysis, they don’t accurately identify product trends, category trends, market opportunities, consumer/shopper trends, etc. This is especially true with natural healthy products. Most natural food retailers forget that they are competing with every retailer in their market – including every mainstream retailers.  To further complicate things, generic canned topline reports fail to consider the shopper. Shoppers will ultimately make product choices based on their wants and needs and not based on a specific stores product selection. Shoppers who don't find what they want at your store will shop other stores including online. This equals lost sales and potentially a lost and disappointed shopper.

The category’s product assortment communicates the store's commitment to meet their shopper’s needs. It can also be used to invite new shoppers to purchase (sample) items that are unique to your store. This is how you increase sustainable sales and shopper loyalty. The primary goal is to encourage shoppers to make all of their purchases in your store and not “invite” them to shop your competition when they can’t find what they want on your shelves.  

Retailers should review their category product assortments and merchandising strategies at least once each year by category for the entire store. Category recommendations should be included in a deep dive category review that all brands participate in. It should be an authentic partnership between the retailer and every brand. Reviews should also include an assessment of the category’s performance at the brand and items level. Retailers and brands should develop tactics and strategies to increase category sales and increase shopper foot traffic.  These strategies, plus much more, are discussed more in depth in other articles.