(by Matt Robinson, product marketing director, Symphony Gold)
The days of “one size fits all customers” assortments are clearly coming to an end. Successful retailers are those offering more localised assortments and easy to shop shelf layouts to create a more focused and relevant experience for customers, while at the same time achieving their sales and profitability goals.
Why are retailers re-evaluating their assortment and space planning strategies?
Three main trends are driving retailers to get closer to their customers: rising expectations of on-shelf availability, new challenges in balancing assortment strategy against increased demand for a more localized assortment, and access to new information sources that can drive both assortment and space planning.
How is the omnichannel environment impacting merchandising?
Retailers struggle with all kinds of challenges when it comes to consumers; their omnichannel expectations, digital channel experiences, and finding new ways to engage them in stores. Its implications have also raised customer expectations for the basics – the right product, in the right place, at the right time. This expectation is felt most keenly at the intersection of assortment and space planning.
What are the top two merchandising challenges that retailers face?
Retailers say their top two merchandising challenges are understanding consumer preferences (to create that relevant, local assortment), and an inability to identify new ideas and innovate quickly (a consequence of not being able to identify customer preferences, and act on them). For grocery retailers, the challenges are even more basic: too many out of stocks, too many promotions, and an uninspiring or non-differentiated product selection.
What can retailers do to overcome these challenges?
According to research from RSR (Retail Systems Research), retailers are planning a massive change to their merchandising systems. Across a global study, 55% of retailers plan to either change out or implement for the first time integrated assortment and space planning. Another 42% plan the same for space optimisation. In addition, the need to incorporate new information from new sources puts an enormous amount of pressure on data integration, and progressive organisations are looking for solutions to mitigate the effort of consolidating multiple data sources.
Where does customer information fit in this picture?
Retailers’ intentions are to plan at a more granular level, including creating more localised assortments. But to make this a reality, they need more granular information about the stores themselves, especially around the peculiarities of each store’s layout. Retailers also need clean, granular data to create accurate local forecasts. They increasingly need customer information to understand which local dimensions are most important to their assortment strategy. This customer information also increasingly needs to encompass not just transactions and demographics, but all that pre-transactional data coming from digitally-enabled behaviours long before the customer ever gets to a store.
What’s the takeaway for retailers and manufacturers?
Meeting the needs of consumers in an age when more data is available than ever before at the same time that consumer expectations are rapidly being reshaped by digital engagement is a very tough proposition. Every part of the retail organisation and its supplier community is feeling the impact, and space and assortment management are not immune. As organisations consider their options for enabling new capabilities in the integration of assortment and space, there are two areas where they can begin work right away.
For more information, download the complimentary white paper “Moving at the Speed of the Customer, Innovations in Assortment and Space Management”.