Do you have a case of slow-moving inventory? The symptoms consist of low sales, constant discounts, and probably a couple of cobwebs in your warehouse. If you have any of these symptoms, then it’s time to take a step back and take a better look at your assortment situation. Sure, you have invested in awesome inventory analysis software, efficient repricing software, and even accept different payment options. But none of this is useful if your assortment is not what you customers are looking for.
The solution to a slow-moving inventory takes you back to square one of your business: what you’re selling. You could provide the most incredible customer experience at prices that can’t be beat anywhere else, but all of that is useless if your customers just don’t like your products. So how can you prevent this from happening? The answer can be found in your competitors, your selling environment, and your customers.
Look to Your Competitors
Before you build a catalog of products, you should take a look at the competition’s assortment. If everyone has a certain item, you should probably carry it as well. Understanding where you overlap with your competition and where there’s a gap in your product assortment can help you optimize your product offerings. If someone goes to your website looking for a certain product that you don’t have, there’s a 77% chance they will leave your site and go to a competitor’s instead.
The belief that you should keep your friends close and your enemies closer has never been more relevant to the world of retail. Analyzing competitor data can help you determine your own optimal assortment by showing you the bigger picture. You can be missing out on an incredibly hot trend if you don’t know what your competitors are carrying. Another way you can focus on the customer’s needs when it comes to your assortment is observing external factors happening in the marketplace.
Look to Your Selling Environment
If you don’t already, look for manufacturers that are in the news, whether it is good or bad. If people are realizing the ingenuity of a product, make sure you add it to your assortment. If people are realizing a product’s failures, it might be time to look for a different manufacturer and lower that product’s price (if you have it.) If you have a product that’s been getting a lot of buzz, increase the price and supply to meet demand.
It’s also important to understand your products’ lifecycles. If your assortment consists of outdated products, that should raise some red flags in your merchandising department. Put those products on clearance, and look for newer, more efficient products that are trending and getting a lot of media attention. The best time to source a product is during its growth phase of the product lifecycle. Manufacturers are constantly innovating, and retailers need to anticipate that continuous innovation consistently. Purchase a small amount of buzzworthy products to meet initial demand, and decide to continue or discontinue selling the products based on the results and reviews.
Look to Your Customers
Customer data is a goldmine of information for retailers no matter what answer they are looking for. The best kind of customer data that will be useful to optimize assortment is measuring your customers’ behavior on your website. If your customers are trashing your products in their reviews, it’s time to discontinue those items. It’s also important to look at customer traffic and conversion rates. Disappointing traffic rates on a product page might go beyond a poor layout, and instead might be throwing you a red flag about carrying that product. If customers aren’t visiting that page, they probably don’t want it. Offer it at a discounted price or bundle it with a complementary product. If it’s still receiving poor conversions, it is time to drop that item from your assortment.
Customer reviews are extremely important to analyze. Gather the most common words featured for each product, whether they are positive or negative, and use them to your advantage. If the review is positive, you know to keep it. If the review is negative, use the most-frequently used words to get an idea of what they are looking for exactly. Use these words and analyze product reviews on competitor websites that consist of those words. Good reviews on products you don’t have can point you in the right direction, and once again your competition will ultimately help you.
For success in a world where information is so easily accessible, retailers need to keep an eye on their competitors, an ear to the ground, and an ear in the air for customers, which can take a lot of work. When it’s done correctly, however, it can yield incredible success for your product assortment. Because you can juggle different automated software services all you want, but it’s all meaningless if your products don’t match your customers’ needs.
How else can you develop a customer-focused assortment?
Contributing Writer: Brian Smyth