Retail Assortment Transformation Tips – Focus on the NOW Featured Title
There is no question that evolving customer expectations and the new customer shopping journey is having profound effects on how a retail decides what product to offer to the customer and where to offer the product (which stores and which channels). A full end to end transformation of the assortment process and tools can take 18+ months and when factoring in the lead time for the new assortments to hit the floor it can be more than two years before the retailer realizes any benefits. But delivering value from an assortment transformation doesn’t have to be years down the road. There are ways that retailers can deliver value sooner rather than later.
There are 5 simple ways to deliver value from your assortments today:
- Rationalize what isn’t performing: For many retailers the move to more localized assortments can be a daunting and complex change for the organization. But localization doesn’t mean more choice in fact customers expect a highly relevant and curated assortment. Retailers almost universally do a poor job of rationalizing the poor performers out of the assortment. All product requires a regular and rigorous review to ensure products deliver a positive return. Unlike traditional rationalization exercises, assortment reviews today need to consider whether items, sizes or even categories should be carried in stores and online or just online. With rationalization methods and metrics developed that include inventory productivity and profitability metrics and consider the role/strategy for an item they can then be leveraged and adapted to the localization process.
- Serve up data insights not just data: Data insights doesn’t necessarily mean complex analytics. More importantly data insights need to drive decisions are the right point in the process. By thoughtfully embedding the right metrics and data insights that tie to what the consumer wants, retailers are position to make better decisions. Data insights could be as simple as standardizing and rolling out consistent and meaningful product attributes that will help the organization identify and exploit trends. Or it could be leveraging customer feedback/reviews as part of the assortment and rationalization processes.
- Think about the end like your customer does: Too often retailers bring product into their assortment without a formal consideration for the item’s lifecycle. How much we buy and how we manage the product in season is dependent upon knowing how long we believe the product will be relevant to our customer. Customer’s clearly tell us when a trend is over and we need to ensure that we set expectations upfront in the buy and have a means to monitor performance against the expectation in season so we can manage risk in our assortment and be proactive about addressing unexpected changes in consumer behavior.
- Quantify the buy based on more than “gut”: Many Buyers today depend heavily on “gut” when it comes to quantifying a buy. But when it comes to localization where the number and mix of stores change, the Buyer is often can’t use their tried and true methods. E-commerce growth and new fulfillment capabilities often muddy the water even more. Putting in place good buy quantification practices will not help today, but also to support greater business complexity (e.g. localization) over time. Buy quantities should be based on standard inputs of how much do we think we can sell, what our desired sell through is at end of time in the assortment, how many stores, along with a limited number of operational constraints. Putting in place a formal and standard approach means that everyone is looking through a similar lens to maximize sales and margin while minimizing inventory risk.
- Clearly Articulate Your Strategy: If you are not clear internally about what you stand for, how can your customer be passionate about your brand? Ensure that you have a well-defined merchandise strategy that has been cascaded and communicated throughout the organization so everyone is clear on the vision and where the organization is investing its resources. Without a clear strategy, the assortment can be burdened with duplication, create confusion for the customer or imbalanced in terms of investments in key categories.
Not all the above capabilities will deliver the same value to every business. The key is to getting started is to figure out where to start. Map out a roadmap of the changes prioritized based on the return it will deliver. Ensure that the plan includes successes along the way, that you have implemented change in manageable chunks so that it you do happen to end up on the doorstep of system implementation you will do so with clarity on what you need and ready to enable additional sophistication with some change management hurdles behind you. If you wait for a implementation of a new system to be the “silver bullet” you will almost certainly be disappointed with the results and you will have missed the opportunity to generate value NOW.