With the ability to research and purchase a virtually unlimited selection of products via the Internet, consumers are no longer content to simply choose from a given selection in a particular store. This fundamental shift in consumer decision-making has dramatically influenced buying patterns and the way in which retailers need to approach assortment planning. No longer should stores receive the same assortments simply because they have similar sales volumes and size, instead they need assortments that are aligned with their unique customer base.
JDA offers the following four strategies to help retailers create localized, consumer-centric assortment plans that increase profitability and help drive their bottom line.
1. Leverage technology: Being able to easily and efficiently leverage flexible, scalable solutions is critical for retailers' ability to easily adjust to shifts in consumer demand and create assortments appropriate to specific regions and stores. Retailers willing to embrace technology can more easily integrate new solutions to manage the increasing volume of data needed to align assortment planning with consumer preferences. Assortment planning technology can optimize product selection by efficiently sifting through scores of options to generate tailored plans that match retailers' product classification strategies. These solutions need to calculate quantities based on consumer demand, taking into consideration space, rate of sale, and other defined parameters. Software solutions promote and support coordinated decision-making through every phase of the assortment planning process, down to macro floor space allocation enabling planners to incorporate accurate consumer demand data necessary for creating effective localized assortments.
2. Identify consumer preferences as accurately as possible: In order for retailers to develop an efficient localized assortment planning strategy they must first identify consumer preferences. By capturing this decision-making data, which can come from a variety of resources ranging from historical in-store product performance to the newest social networking options, retailers can create differentiated, customer appropriate and profitable assortments. As the buying habits and preferences of consumers inevitably change, especially in response to the slowing economy, retailers can rely on intelligent solutions to analyze demand and to identify which consumer preferences are driving product or product category trends significantly upward or downward. This will in turn enable an immediate shift in assortment planning strategy, putting increased emphasis on those products that are trending upward, and less emphasis on those that have a significant downward trend.
3. Collaboratively plan within your retail organization: Traditional assortment planning tends to be subjective, disconnected and time consuming due to individual buyers working independently from each other as well as from merchandising and planning operations. As a result of this siloed approach, it can prove difficult to optimize the overall merchandise assortment in a given location or across the enterprise, let alone ensure premium floor space is allocated for the ideal mix.
Additionally, valuable time must be spent every season as individuals create separate plans to address carryover and seasonal product selections without visibility or respect for the entire assortment. Moving from disparate processes and silos to a unified approach provides visibility to the entire process, enabling previously isolated groups to work collaboratively during the entire assortment management process.
4. Analyze assortment effectiveness: Once a localized assortment planning strategy has been implemented, it is important for retailers to analyze the effectiveness of the assortments in those specific areas and stores. Assortment planning solutions can incorporate multi-dimensional evaluation and review capabilities for complete analysis of assortments across every product and store characteristic, helping retailers to knowledgeably drive margin and sales. By evaluating product sales and determining across varying markets which price points, colors and brands are not resonating with the customers, retailers can adjust the assortment range of a category, increasing the space available for more profitable merchandise.
Due to the ever-increasing competitive pressures, retailers must accurately align their product assortments with localized consumer preferences - in every store and every department. Establishing a comprehensive assortment planning strategy gives retailers the flexibility to effectively manage consumer data needed to adjust to changes in consumer preferences, maximize profits and sales while improving turns, reducing carrying costs and keeping inventory fresh.