Three Things to Know About Product Assortment

by • July 5, 2018 • Merchandising + TrendsComments Off on Three Things to Know About Product Assortment367

How many times have you walked into a retail establishment and been dismayed by how few products the store carried? On that same note, how often have you given up on finding the product you wanted because you couldn’t navigate your way through a store without getting lost in a wilderness of knick-knacks? Either one of these situations can deter customers from revisiting a particular retailer — but can be easily remedied if the store owner pays a little more attention to product assortment.


To facilitate a positive shopping experience for your customers and to maximize the profitability of your store, it is important to understand what contributes to an effective (or ineffective) product assortment, as well as what metrics to use to evaluate your inventory’s performance.

If you’re looking to create a more compelling product assortment, or if you just want to gain a better understanding of the terms we use to talk about inventory strategy, here are three things you need to know – and how to use this knowledge to your advantage.

#1. Understanding Key Terms

There are two main terms when discussing inventory strategy: Depth and Breadth.

The depth of your inventory refers to how well-stocked your store is of each specific product, style, or SKU. For instance, if you are a small local boutique, it is likely that you have six or less of each SKU — meaning you have a shallow product depth. If you have a large warehouse with over 50 pieces of each SKU or style, on the other hand, you have a deep product assortment.

The breadth of your inventory refers to the diversity of products that you carry in your store — meaning the variety of products that can be found in your store or in your website, as well as all of the various product lines you carry. Unlike with product depth, you could have only 2 pieces from each line or style and still have a wide breadth of inventory. The Balancereports, “For instance, a store may only stock four items of each SKU, but their product breadth (the variety) may consist of 3,000 different types of products.”

#2. The Impact of Correlation

Correlation refers to the relationship between products, or the likelihood that two products are bought at the same times. Think of this in terms of items that are often bought together, such as: shoes and socks, gloves and scarves, mascara and eyeliner, etc. Knowing which products that customers usually want to purchase together can help you increase sales and add-on sales, since your store can become a one-stop-shop for all of your customers’ buying needs. RetailTouchPointsreports:

“If an item is always purchased with another item (like bagels and cream-cheese), it is very important to know the ‘often bought with’ items, and ensure that they are stocked together and in the right proportions. Not having one item from a basket of high affinity products will result in loss of the customer.”

#3. Review Performance Regularly

Without regularly reviewing the performance of your inventory – such as which products are performing well, which products are performing poorly, and which products would reduce sales in other categories if they were to be eliminated — it is difficult to make informed decisions about your product assortment. To effectively increase sales and drive repeat traffic to your store or website, you need a data-based understanding of your inventory…and that comes from research. Nielsenreports:

“Manufacturers and retailers should react to assortment issues with measurement and research. On one hand, pay attention to trends outside of your wheelhouse, but avoid pursuing growing trends in isolation. Always proceed with curiosity and proactive research, as trends can sometimes be a predictor of expandability, but they’re not always the primary indicator.”

It takes effort, research, and dedication to create a top-performing product assortment. When retailers aren’t willing to put in the work, their margins suffer. Knowledge is power, however, and by regularly using the above performance metrics to measure your inventory you will be able to exceed your store’s sales goals and to grow your business over time!


Take advantage of ASD Market Week’s 90+ free retail strategy sessions this July 29 – August 2, 2018 in Las Vegas.


By Jasmine Glasheen, RetailMinded.com 

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