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With tens of thousands of food products available in today’s supply chain, the challenge for most retailers is offering the right assortment of products that continue to meet their shoppers’ needs and draw new customers to their stores. This requires retailers to be highly effective at assortment optimization. Here are five things you need to know about assortment optimization.

  1. What is assortment optimization? At the end of the day, it’s about offering the right products in the right quantities at the right time in the right store locations. Retailers must select the right product mix to maximize revenue.
  2. Approaches to assortment optimization. Offering a deep assortment means a retailer has a lot of products within one category, sometimes exhausting all possible options. A wide assortment, on the other hand, is a strategy to have one of every product category, with minimal specialization. When a retailer wants to attract customers outside their main target audience, they may offer products outside the core offerings, which is called scrambled assortment optimization. Often front lanes are merchandised in this way to drive impulse purchases. Localized assortment planning features locally grown products.
  3. Data-driven decision making. When optimizing assortment to maximize profit, current trend data needs to be balanced with historical inventory data. A brand or subcategory of products may be trending high right now (for example, due to pantry stocking during a pandemic) but this may be temporary. Long-term data will address volatility in sales within a category and ensure a balanced assortment is in place.
  4. Fill competitors’ gap. Competitive sales data can be used to understand where your competitors are strong and where they have gaps. Understanding competitive data can help you understand where there are spaces in product categories, with brands or in price tiers which your stores could be filling, drawing in new customers or increasing loyalty. Within healthy living categories, this creates an opportunity for retail dietitians to make product recommendations to buyers and merchants.
  5. Stay true to your brand. The gold standard example of this dictate is Target. Shoppers love the hunt at target, ultimately finding a new product or brand they love. In assortment optimization, Target recognizes this component of their brand and plans for it. Instead of trying to be all things to all shoppers, retailers must choose an approach and assortment that aligns with their brand.

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