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5 Reasons Why is Assortment Planning so Difficult for Retailers – 2024 Guide

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Nowadays, the lifespan of almost all products has decreased significantly compared to previous years. This certainly makes it difficult for all retail businesses to do business. In such a situation, the advantage of retail businesses is that they are much easier to adapt to market requirements than those engaged in production.

The reason for this is significantly lower financial costs because less investment is needed in changing the range, compared to manufacturing companies that have to change the entire production plan, raw materials, and machinery. But retail requires more flexibility and adaptability daily when it comes to the fast-changing purchasing habits of individual buyers. Then planning the scope of your products, how they are being sold, merchandising strategy makes it a difficult task.

Which then brings us to the assortment. Ever wondered why planning the assortment is such a challenging task for retailers? We will discuss some of the reasons in further texts.

1. Creating realistic expectations from retail, in a fast transforming market

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A good retailer’s first question is always, what do we expect when we start selling? Certain sales targets or concretely specified profit? The most difficult and the most important thing to do in retailing is to set realistic goals for retail, based on which further sales indicators will be set, and the progress of the retail can be measured. Goals will be the essential part of the strategy, the starting point.

2. Constant balancing between income and expenses

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To understand why balancing is so difficult, it’s important to know the basics of assortment dimensions. Assortment dimensions are directly connected to the number of products within each category of products, meaning they represent the width and depth of the buying choice within a category. Depending on the needs of the market and the type of retail the amount of each product is determined.

The most important task for a retailer is to select the assortment and individual products within it in such a way that creates a balance between the income and expenses. The income refers to the achieved sales percentage and the differences in price, while the expenses are connected to product stocks and additional costs related to the specific product. Planning the retail in a way that will be the most successful then requires a strategy. But a successful strategy cannot be googled or directly implemented from the books, it means a retailer needs to be able to constantly combine strategies to find the most satisfying one for that time.

3. Predicting the market demands

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Whether we’re talking about the service or product market, the demands are so prone to change, doing your best to predict them is a complex process. Retail product assortment needs to be flexible and has to be changed frequently, to keep the interest of the buyer. Click here for more product assortment advice. Constant changes in the assortment are also needed due to changes in the supply and sales market.

Changes are faster, consumer habits and needs are changing, and thus the life of the product is shortened. It is therefore important that the retail’s policy relating to the range is flexible. It is necessary to constantly introduce new products and withdraw old ones from a sale. To make the right decisions about the introduction or withdrawal of certain products, it is necessary to do market research.

Such research aims to determine how much a product is in demand on the market, how customers look at it, what its price should be, whether potential consumers are willing to pay that much for a particular product, whether the company covers its costs at that price and so on. In addition to all the above, it is certainly necessary to investigate the competition and if it has similar or the same products.

4. Keeping the attention of the buyer on YOUR product!

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Carefully choosing the set of activities that you will implement to focus the buyer’s attention to your product and even encourage more will to buy your product, means you have to be almost a magician. And if you manage to make the purchase easy as you go, then you are a successful merchandiser.

The market is becoming more and more intense and in such a market you have to differentiate yourself from your competitors. The most valuable asset of a company today is the brand. And customers loyal to the brand! Merchandising views sales from the consumer’s point of view. Today, 40% to 60% of purchases are unplanned, and merchandising helps to win a market share. Merchandising works directly “on the field”, meaning it makes products visible and attractive to consumers and takes its place at the moment when consumers decide to buy.

5. Avoiding the confusion in the heads of the buyers while displaying products

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Who would say that displaying products requires such a philosophy, but combining complementary products do influence the attention and intension for purchase? Successful retailers know the value of this and have developed many theories on how to inspire sales and avoid confusion. For example, if you want to highlight the latest inkjet printer to increase sales, be sure to put ink and printer cables next to it. Conversely, if you put computers or laptops next to, for example, you can easily distract from the main product. Some other things a good retailer has to be aware of include:

– Reducing stock-outs (lack of goods) is one of the key ways to have growth in a crisis. By definition, if you reduce the stock-out, sales grow by 10%.

– POS (point of sale) and POP (point of purchase) materials will position your goods or service as primary and separate it from the competition. The influence of color is very important here!

– Another segment that you need to take into account is price highlighting. Prices must be set. Research has shown that 80% of consumers will not buy a product if they do not see the price,

The ultimate goal of retail is to create a customer-centric environment that makes it easier for customers to find the goods they want. Assortment planning is one of the tools used to make this happen. It addresses the fundamental element of items that will be available for sale. Effective assortment planning ensures that the right combination and assortment of retail goods is available to customers in each channel and category in stock.