"Don't find customers for your products, find products for your customers."
Seth Godin, Founder at altMBA
Trader's success depends on what it sells and to whom. The more efficiently it uses this rule, the faster it reacts to any changes in market demand. Since retail's primary goal is to maintain a consistently rapid turnover, products on the shelves should always be sold out and replenished again. The assortment management system does an excellent job with it. And it's not about the manual filling of Excel spreadsheets, but about exploiting reliable multifunctional software and optimizing staff activity. Let's look at what assortment management is, and everything a retail industry has to know about it.
In retail, the definition of assortment management looks like the following: it's the processes of planning, updating, analyzing, and evaluating the store assortment, providing full and timely satisfaction of the dynamic demand.
In turn, the trade assortment is a set of products that a retailer offers to its customers. It includes the following metrics:
the number of product lines (e.g., cheese, yogurt, biscuits, etc.);
the variety of product in each line (like the percentage of sweet/savory yogurts);
the average price of the product line;
the ability to meet demand;
the compatibility of assortment groups.
Every retailer deals with an assortment, but the way of its management depends on the company size. If the seller has one store and 100 items of goods for sale, it's much easier to manage them: cope with orders, determine profitability, and change the assortment. But what if the company has a chain of stores and about 200 thousand products? It isn't easy to run with such volumes without automation.
That is why today the IT-market offers lots of solutions, able to fix it. For such purposes, some of the most widespread vendor products are Oracle Retail Assortment, Item Planning, Analyze 2, etc.
How To Run Product Assortment In Retail
As seen, assortment management is divided into the following stages:
updating the strategic plan;
assessment of efficiency.
Besides, there is one more core point that is worth recalling. It's the elimination of inaccuracies identified during the assessment of assortment. But first things first.
Assortment planning in retail is a set of activities related to the determination of items for sale during a specific period. Here a company considers its general vision regarding the volumes and types of goods, agreements with suppliers, internal policies, and future targets.
It's also a time for creating an assortment management strategy. The last one is a set of principles and actions related to goods selection and their delivery to end customers. It is subject to various established retailer rules, including marketing ones. Among other things, the strategy considers the frequency of assortment changes, features of trade space planning, etc.
Updating the strategic plan is a periodic renewal of the company's vision under market conditions. It is needed to check a plan's relevancy and validity and harmonize it with the demand. Systematic plan revisiting makes a company flexible.
Analyzing the assortment policy effectiveness is made for the establishment of the assortment rationality and identifying the following inconsistencies for their further eliminating:
redundancy of items because of improper planning or an unpredictable drop in demand;
insufficient assortment due to the lack of opportunities;
the assortment structure doesn't match economic needs, and so on.
Thus, assortment management is a rather complicated job requiring a large team or solid digitalization. In this area, the risk of human error can be costly. This is one of the primary reasons a business needs reliable software here. Besides, such a digital solution can optimize employees' work and run the above processes with minimal human interference.
How a Powerful Assortment Management Software Looks
"We experiment endlessly, with new products, new companies and new marketing."
Richard Branson, Founder at Virgin Group
Comprehensive retail assortment management has the following issues:
Launching a new product. This procedure has its difficulties. It's necessary to allocate additional financial resources to purchase or choose less popular goods to exclude them from the assortment. It is hard to accurately predict how profitable a new product will be.
Limited space. Store shelves have a certain spaciousness. The retailer's task is to distribute the retail space between all product categories rationally. It's often troubling to place goods correctly and maintain their quantity in conditions of constant purchase.
Lack of relevant data. Retailers often lack up-to-date information on product profitability. It increases the risk of strategic mistakes and significant losses.
Modern digital solutions minimize the above difficulties. Any of the hundreds of products can be purchased. But it is not easy to determine which product is applicable in a particular business condition. Anyway, perfectly suitable software for this purpose has a few versatile features. Among them:
a unified interface for back-office (logistics, finance departments, etc.) and stores staff;
a high level of integration with ERP and retail space management system;
development on the microservice architecture, providing autonomy operating and flexibility;
seamless interaction with POS and marketing to generate and share sales data (which goods from which shelves are sold faster), analyze them, and use to form a strategy in the future;
integration with a warehouse system and automatic order formation, based on the number of goods, profitability, and other criteria.
Not all ready-made solutions can provide businesses with such benefits. Meanwhile, custom development by JEVERA experts enables satisfying the retailer's needs for a robust assortment management system that has the above features.
Assortment management requires significant efforts of the trader's team. Demand is volatile, and the company has to meet it under any conditions. That's why retail digital transformation takes place, and companies are focusing on software implementation. Here, traders need a system that seamlessly integrates with internal departments and performs much more functions than seems at first glance.