Why Do I Need a Merchandise Assortment Planning Solution?
Retailers face the challenge of satisfying today’s ever more unpredictable and demanding consumers who want and expect their favorite retailers to have exactly what they’re looking for in stock and also a wide selection to choose from. This is becoming ever more complex with multiple shopping channels and consumers armed with mobile devices and more information than ever before.
Increasing emphasis on customer centricity has also affected retailers’ ability to plan effective and profitable assortments. Point-of-sale data shows that shopper preferences vary greatly from region to region and even at the store level.
As such, retailers must get their assortments planned correctly right from the start as they will drive the success of the business over the next months and seasons. That means finding the balance between the assortment’s width – the number of products within a category – and its depth, which is defined as the number of units for each one of those products. Failing to do so typically results in one of two problems: either the assortment is too narrow and doesn’t offer the range of products consumers expect, or the assortment is too broad. If it’s the latter, the retailer runs the risk of product obsolescence and paying the price in the form of markdowns.
So, retailers are challenged to plan their merchandise assortment so that it offers the right amount of the right products in the right stores and channels at the right time in order to meet customer demand and maximize sales and margins. This is no easy task given the number of sales channels and products and the need to localize assortments. Doing this without a proper merchandise assortment planning solution is taking a big risk.
Although it is possible for individual departments within a store to manually plan their merchandising assortment, the cross-category optimization facilitated by merchandise assortment planning software avoids the cannibalization of other departments and results in optimized sales across a store in general.
Furthermore, merchandise assortment planning software allows retailers to make store clustering and localization decisions that will distinguish them from their competitors, increase profit margins and keep valuable customers loyal to their brand.