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Product Assortment Optimization: Find Your Perfect Product Mix

Updated: Aug 17, 2022

Every retailer, from a department store to a small town boutique should have a merchandising assortment plan in place. In this article, we will review the best merchandise mix strategy to offer a fresh and exciting assortment to your customer while reducing retail markdowns.

You may want to make slight adjustments based on your unique business needs but based on my 15 years of retail merchandising experience the below breakdown is the best product assortment mix. We will be speaking to one product category, but the assortment penetration should remain the same for your total store inventory.

retail merchandising strategy

The perfect product assortment mix formula is:

50% Core + 15% Core Update + 20% Newness + 10% Seasonal + 5% Traffic Drivers

Core Assortment/Replenishment Should be 50% of Your Assortment Mix

Your core assortment, which is also referred to as replenishment or re-order items, is the key driver for your business.

core product assortment

Your customer comes into the store specifically looking for the product and will be disappointed if it is not on the shelves. For an e-commerce store, a core item would be your top glance-view, top-converting product detail pages.

In this example, you have a top-selling brown chenille sweater that you keep in the assortment almost all year long (except for the summer months). You purchase it on a monthly basis and you make sure you are never out of stock.

Core Updates Should Be 15% of Your Assortment Mix

update your core retail assortment

Core updates, or what we call reinvents in the industry, are slight changes to your core products that will add newness to your store's assortment without adding much risk. You can take your top-selling brown chenille sweater and update it with new colors, new materials, or maybe a slightly different silhouette. You may want to take the season's hottest colors from Pantone and apply them to your merchandise. If the weather is turning warmer, you may keep the color the same but slightly change the material. Core updates are merchandised with core products in-store and can be linked as product variations on your product detail pages. In this example, we reinvented our brown sweater into a purple version.

Newness Should Be 20% of Your Assortment Mix

Here's where the fun in merchandising begins! Understanding market trends or up-and-coming

bring newness to your fashion assortment

fashion brands could be key for adding newness to your assortment. It may be that neckline prints are becoming popular and your want to be on trend for your fashion customer. New items are completely new, they feature fashion colors and prints and will stand out amongst your core assortment. Newness brings in repeat customer traffic. In order to keep up on trends make sure you are attending trade shows and monitoring online activity. At Point-Of-Sale Strategies, we create item gap reports to highlight what new, trending products may be missing from your assortment. Markdown risk is higher for new items, so keep that in mind when purchasing. And make newness easy to find in your store, either in the front of a brick-and-mortar or on your homepage for an e-commerce store.

Seasonal Should Be 10% of Your Assortment Mix

seasonal merchandise strategy

Any good merchandiser knows that adding a seasonal assortment can help drive incremental sales for your business. Customers love buying seasonal goods and it is a great way to grab market share if you are on top of mind when the customer thinks about seasonal goods. One thing to note: Not all Holidays are created equal in retail terms. You may want to change the percentage of your assortment based on seasonal demand. Take a look at your monthly selling and see if peak weeks align with any particular Holiday. From what I have seen in retail, Christmas, Easter, Halloween, and Back-to-School are the top retail sales holidays. In our sweater example, we now take a fun twist on our sweater and add fun seasonal prints like our favorite gingerbread man. Merchandise seasonal items together on a display in the front of the store for brick-and-mortar locations, for e-commerce stores, make sure you have banners at the very minimum to call out your seasonal assortment. While there are a lot of great perks to offering a seasonal retail assortment, be aware that the selling period is limited and higher markdowns could occur.

Traffic Drivers Should Be 5% of Your Assortment Mix

As a retail buyer, here is where you put your marketing hat on. Traffic drivers are also

retail product traffic drivers

what we call in the industry "Marketing Markdowns". They have a lot of flash; and a lot of risk. Large companies have the option to throw money away but if you are a small boutique owner, make sure you take high markdowns into consideration when you price traffic items. Traffic drivers should be very different from your core assortment and should be highlighted in your store's windows or on your e-commerce landing page. It may be a unique vintage item, or a high-end label, whatever it takes to draw customers in and get them talking. I know it sounds crazy to buy something that you know may be a markdown, but if it is a very small percentage of your business, you won't feel the impact. Plus, marketing markdowns tend to drive purchases, even if it is not the traffic driver itself that is being bought. In our sweater example, we have a new silhouette: a cardigan, a bold print, and high-fashion colorways.

Having a strong merchandising strategy in place will help your small retail business drive sales, reduce markdowns, and increase conversion. Plus, it will make your customers happy! To learn more about merchandising check out my overview on breadth vs. depth in assortment planning.

Any questions? Contact me anytime

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