Every retailer knows that if it wants to be successful and profitable, it must strategically align its product selection to meet customer needs. Creating compelling, curated collections requires more capable assortment planning.
However, assortment planning can be a major pain point for retailers, due to the number of people involved and the complexity of the details required to be effective. Traditionally, the process includes a slew of meetings, the never-ending consolidation of spreadsheets, and cobbling together information from dozens of systems to get it all done. Retailers are perpetually racing against the clock, yet at the end still often find themselves saying, “We could have done this a lot better, but we ran out of time...”
Why It’s Time To Reinvent
Picture this: A customer walks into a store looking for an item that he or she can always count on being in stock, but the retailer has decided to stop carrying the product. First, the customer is probably not going to be happy. His or her next likely move is to check a competitor’s web site from his or her mobile device to see whether the competitor carries that item — one of the last things a retailer wants when a customer is standing in its store.
This scenario could have been avoided if the retailer had an effective, customer-focused assortment planning process. The question, then, is: how do retailers reinvent their assortment planning strategy in a way that improves the customer experience while also maximizing profitability? Retailers must start by closely aligning customer data with planning systems. When retailers shift to be more customer-centric, they become more relevant.
Customer-centricity requires that retailers begin to collect and integrate customer data with the other information leveraged in decision-making processes. Retailers should consider capturing customer profile data in addition to the purchasing and browsing data they may already own. There are several analysis tools that deliver forward-thinking insights from this data, enabling companies to correctly respond to changing conditions with actionable and repeatable processes at the point of service — whether in-store or online.
For instance, an obvious example is that a customer interested in ice fishing might not be interested in purchasing a tuxedo. However, an assortment planning tool that is aligned with customer data will indicate that there is a high likelihood that customers interested in ice fishing are interested in purchasing wool socks and steel-toed boots.
Insights into preferences, needs, lifestyles and shopping behaviors are not only vital to delivering personalized assortments, but also support having a 360-degree view of the shopper.
The ease of online search, comparison shopping and transparent pricing has created a hyper- competitive environment. To deal with increased competition, retailers must introduce more products with a faster cadence, and move on slow sellers more aggressively, to refresh assortments more frequently.
And, of course, this is retail, so expense control remains key. Getting to customer-focused and localized assortments means that never before have so many new and detailed plans been asked of so few planners. Localizing assortments doesn’t mean starting with a chainwide assortment plan and modifying a few choices by market; instead, it requires building a broader number of distinct and unique assortments that are focused from the ground up on each local market and customer base.
To thrill and delight today’s consumers, retailers must go beyond fulfilling shoppers’ wants and needs to exceed expectations with unexpected but relevant offerings. Therefore, it is critical to localize assortments and home in on each store’s specific shopper demographics.
The New Plan In Action
Revisiting the example of a customer who can no longer purchase his or her go-to product — data and analytics on this customer’s buying habits indicate that he or she visits the store every few weeks for this particular item, and is in the top 10% of all customers by spend and margin. The data also tells the story around what other products catch this customer’s eye.
A smart retailer would not only adjust assortment planning to keep up with this customer’s demand, but also provide personalized product offerings to increase the sale size during each visit. Retailers that shift to this data-driven approach will find they have additional opportunities to engage with the customer (and make a sale).
In reality, the shift to this data-driven approach can seem daunting — it is a fundamental shift in how assortment planning takes place. But if retailers can successfully leverage shopper data to inform every assortment planning decision, they will find that their customers are ultimately happier, and their bottom lines are healthier.
Peter Charness is a retail software executive with global experience in innovating solutions for the retail and CPG industries. Charness has held executive roles with various retailers, running the merchandising and planning functions prior to moving into the software industry, where he has led the product initiatives for several major software companies with a focus in the areas of BI, merchandise, and supply chain planning as well as other retail systems. He currently serves as SVP Americas at TXT Retail, an Aptos Company.