In retail, the art of assortment planning has long been a critical factor in determining success. Traditionally, the focus has been on financial metrics such as sales, units sold, and inventory holding. However, the often invisible and underappreciated impact of these decisions lies in customer satisfaction and loyalty.

The widely used 80/20 rule, which analyzes sales data to prioritize products, seems effective at first glance. However, the repercussions of eliminating slow-moving products can significantly impact customers. It is not simply a matter of replacing these products with potentially more salable ones. It's about recognizing the unique attributes or niche appeal of certain products. Some items may serve a loyal customer base or have unique features that set them apart. Removing such products may force customers, especially loyal ones, to seek out these products from competitors. This could result in a loss of that specific sale and a decrease in the total value of the basket. Customers could end up buying more from competitors.

Keeping only the best-selling items does not necessarily guarantee an increase in sales. Within an assortment, products or brands often compete for customer attention. In such cases, customers show low loyalty and easily switch between alternatives based on price or promotions. This behavior opens the opportunity for retailers to explore other suppliers. It encourages innovation, higher margins, lower prices and increased volumes.

Building an assortment that balances business financial goals with customer satisfaction is a combination of art and science. Together with our partners, we can help emphasize the fusion of business and customer-centric metrics. This amalgamation and the experience of the merch and commercial teams allow for a comprehensive iteration process. It leads to more informed decisions that serve both business interests and customer needs.

Holistic Approach

The key to successful assortment planning lies in considering a holistic approach. It involves understanding the complexities of customer behavior, as well as recognizing the importance of niche or unique products, and realizing the potential of exploring alternative options. In this way, your offers can be optimized, improving customer satisfaction and improving business results.

Customer-centric assortment planning is not just about numbers and sales. It's about creating a shopping experience that resonates with your customer base. It also fosters loyalty and maximizes growth potential. It's an intricate dance between what the business needs and what customers want, a balance that leads to mutual benefits.

In conclusion, the evolution of assortment planning must prioritize the combination of financial strategies with customer-centric insights.

It is this combination that defines a retailer's success, ensuring a short-term increase in sales and long-term customer loyalty and satisfaction.

Full note link: https://www.datasapiens.co.uk/blog/a-holistic-approach-to-customer-centric-assortment