The hazards of a poor product assortment

A category’s product assortment defines the retailer communicating what they want to be known for; wide selection of better-for-you products, local, fresh, etc. Stocking the right assortment of products is critical to creating happy, loyal customers.  Want to make sure that your store has the right variety and quantity of products to meet the needs of your shoppers?

The majority of projects I do for both retailers and brands focuses on category product assortments. With each project I find a lot of assortment voids at the category level in both the retailer and in the market. These voids equal lost sales which account for tens of thousands of dollars lost per category in each and every store.

Retailers need to differentiate themselves from their competitors. The category product assortment is how they accomplish this – especially with the help of natural organic, plant based, allergy friendly, etc products. Natural retailers are where shoppers tend to see new product trends. Lost sales due to out-of-stocks equal a huge missed opportunity for natural retailers to capitalize on new product trends in the marketplace. Missed opportunities are similar to out-of-stocks, they encourage consumers to shop your competition.

Most natural retailers stock between 5,000 and 35,000 items (or SKU’s). They choose the selection of products they carry from potentially several hundred thousand available items in the natural channel.  It’s unrealistic to expect a retailer to be an expert in every category and in all of the items their store sells including what’s being sold in the market.  Large retailers struggle with this – including those in mainstream. The best strategy for a store to effectively manage its product assortment is to enlist the help of their brand partners. 

One of the biggest mistakes I see retailers and brands make is relying solely on the canned topline reports, like the Pareto curve or on item ranking reports.  While these reports are a great place to start, they don’t accurately identify product trends, market opportunities, category trends, shopper trends, etc. This is especially true with natural products. Most natural retailers forget that they are competing with every retailer in their market – including all mainstream retailers across every channel.  To further complicate things, canned topline reports fail to consider the shopper. Customers will ultimately make product choices based on their wants and needs and not based on a specific retailer’s product selection.  Customers who don’t find what they want at your store will shop other retailers including online. This equals lost sales and potentially a lost customer.

Your category product assortment communicates your commitment to meet your shopper’s needs. It can also be used to invite new shoppers to try (sample) items that are unique to your store. This is how you grow sustainable sales and increase shopper loyalty. The goal is to encourage shoppers to make all of their purchases in your store and not “invite” them to shop your competition because they can’t find what they want on your shelves.  

Retailers should review their category product assortments at least once each year by category for the entire store. This should be included in a deep dive category review that all brands participate in. It should be a partnership between the retailer and every manufacturer. It should also include a review of the category’s performance along with a review of each brand’s items. Retailers and brands should develop tactics and strategies to increase category sales and increase customer foot traffic.  These strategies are discussed more in depth in other articles.

What are your strategies to grow sustainable sales and increase shopper traffic?

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By |2019-01-04T12:16:15+00:00December 24th, 2018|Merchandising Effectiveness|

About the Author:

Daniel Lohman, CPSA is Strategic Advisor in the CPG and Organic Industry. His company, Category Management Solutions (CMS4CPG LLC), provides innovative ideas, actionable insights and strategic solutions for companies interested in gaining a significant competitive advantage. He assists companies in expanding their retail distribution and improving their merchandising. His extensive knowledge and expertise reaches far beyond traditional category management and has earned him recognition throughout the industry as an expert, speaker, trainer and thought leader. Daniel can be reached at Dan@CMS4CPG.com. Connect with me on LinkedIn.

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