Small Business Assortment Planning | Tory Burch Foundation

Customer acquisition gets people into your store. If you strategically stock your store, your customer is more likely to walk out with a purchase they love. Making decisions about what products to carry is called assortment planning. Assortment planning is the science behind the art of curating and presenting products in a retail store. The goal is to ensure the right mix of products is available to meet customers’ needs, drive sales and profits, and optimize the use of physical retail space, explained retail strategist and Retail Huddle founder Ami Rabheru. She joined our webinar series to share best practices for for small business assortment planning for brick and mortar.

Assortment planning requires the store owner to take a big-picture view of marketing that accounts for trends in the market, which in this sense includes both your industry and your total available market, or the maximum number of people that could potentially buy from you. Understanding the retail cycle gives context to the choices you might make about when to buy products and how your inventory should move through the store. The four P’s of marketing helps you make even stronger decisions about what to buy, where to place it in the brick and mortar store and how to stand apart from competitors.

THE 4 P’S OF RETAIL MARKETING

Even the best products need help standing out in a crowded marketplace. To help get you there, Rabheru laid out the four P’s of marketing: Product, Price, Promotion, and Place. 

Product

Balance is key. You want to have enough options so your customers feel like they can choose what’s best for them, but not so many options that they become overwhelmed and turn into browsers instead of buyers. “When you simplify, you can amplify,” Rabheru said. Always keep customer centricity in mind. What does your customer love? What buying patterns or trends do they lean into? What can the movements of the wider retail industry tell you about your customers’ evolving needs or desires?

When choosing specific products, consider breadth versus depth. The breadth of your product assortment refers to the variety of the category mix that offers different types of products. The depth is represented in variations or options available within each product category. This includes different sizes, colors, styles, brands, and models. For example: In a store that carries a ladies’ wear product mix, the breadth of that mix might include outerwear, skirts and tops, while the depth of that mix would be describe one peacoat and one denim jacket, in one color each (outerwear), three lengths of skirts in two colors each (skirts) and one button-down and one crewneck in one color each, all with a full range of sizes. Whether you choose to focus on growth via breadth or depth is subjective, and should be determined by what’s important to you and your customer. 

Seasonal mixes are tactics that help curate an impactful offering tied to a trend or seasonal product segments. This is where you’ll capitalize on events, awareness days, and holidays in the retail calendar. 

A great product assortment strategy not only captivates your customers [but it also]enables you to stand out in a crowded marketplace.

Rabheru also shared the importance of the 80-20 rule, which indicates that 80% of a store’s sales tend to come from 20% of its assortment. Track which items bring in the most revenue, and make sure they are always in stock. 

Rabheru recommends using a Microsoft Excel spreadsheet to plan and track your product mix throughout seasons and through changes in breadth and depth. Enterprise resource planning software can manage this for you, but is likely better utilized for tracking financials and sales data. 

Price

Your customers will want variety in price as well as product, and the price architecture of your brand will depend on how you categorize your place in the market. Rabheru demonstrated this architecture in terms of good, better, and best. Envision a triangle. For a store that falls into the value to mid-range category, the majority of their products (the base of the triangle) might correlate to prices that specify them as good, then scaling smaller upwards with better, best, and maybe a small percentage of luxury offerings at the top. A mid-range brand may carry products in the good and best range, but it’s primarily focused on better priced items. Luxury brands will focus on just that, luxury, but may include items in the better range as an entry pricepoint for customers. 

What constitutes good, better, best, and luxury prices, as well as what percentage each will make up in your product mix, will differ between businesses and industries. This is where customer profiles and personas come into play to determine what these categories will mean.

Promotion

Promotion refers to how you differentiate your products when communicating to potential customers. That can be through external communications as well as store placement and signage. In terms of promotion in store, here are a few questions to think about: How does the branding or packaging impact a product’s shelf appeal? Is it aligned with your target market or where you’re aiming to position your brand, and how can you communicate that to the customer?

Place

When it comes to the physical layout of your brick and mortar store, visuals are your friend. Either digitally or on the sales floor, map out your products and imagine yourself in your customer’s shoes. What do you immediately feel when you enter your store? What’s the ambiance? Rabheru said “customers buy with emotion,” and if you expect to attract potential customers, engage them with your offerings, convert them to buyers, and repeat that cycle, you’ll need a better understanding of how they feel. 

Another perk of laying out your product assortment and arrangement visually is really seeing how things look together. Experiencing how your customer will experience the product mix will help identify redundancies, gaps, and opportunities. “Eye level is buy level,”Rabheru emphasized, so consider putting your sales drivers, like your hero, or most popular, products and impulse buys. Create logical navigation to optimize space and cross-selling opportunities.

Your store shouldn’t look bare or overcrowded–both discourage purchases. When you, as a customer, walk into a store you like, “Look at their choice,” advised Rabheru. “It’s just enough choice that the customer feels they have a choice.”

It’s important to note that best practices for in-store placement won’t necessarily translate to your website. Rabheru said your bestsellers in-store are hardly ever your bestsellers online, so you need a different strategy for each distribution channel. 

Assortment planning best practices are helpful, but you’ll learn what works for you along the way. When done successfully, Rabheru says a product planning can impact the long term trajectory of a brand. “A great product assortment strategy not only captivates your customers,” she said. “It enables you to stand out in a crowded marketplace, but it also aligns with your overall trading strategy.”