One of the most important decisions to make while setting a retail product assortment strategy is making the choice between depth vs. breadth of your assortment.
At the end of the day, you have a fixed buying budget that is tied to your sales budget, and now you need to allocate this budget to specific products. You can not buy every product you like or every single variation of that product. You have to choose and decide where to invest that inventory money to get the best return on inventory.
Product Assortment Planning
The product assortment is the merchandise mix made available for customers at the store to choose and buy from.
The process of product assortment planning involves making decisions about the type of merchandise to carry, the adequate quantity to buy and the different variations for each product.
By creating a product assortment strategy you will be answering those questions:
How many products are you going to carry?
How Many options per product?
How many pieces per size per color?
All this is decided based on your choice of depth vs. breadth.
Breadth & Depth Definition
Product breadth is how many different products a store is offering for sale. The more products are offered the broader is the product assortment of this business.
Product depth is how many different variations of each product the store is carrying. These variations can be different colors, sizes or any attribute related to the same product. The more variations the store is offering, the deeper is its product assortment.
Effect of Depth & Breadth on Buying
When you decide on your product assortment strategy and choose between depth vs. breadth you will then need to adapt your buying strategy to this choice.
If you are going for a higher breadth/ lower depth strategy, you will need to carry a wide variety of products. This will mean that you will have to find new suppliers and new product categories/styles/options to buy.
Also due to the fact that this strategy dictates a lower depth, this would mean that you will need to find suppliers and wholesale vendors that will accommodate your low MOQs (minimum order quantity), since for each product you might not be able to meet the high MOQs required by many suppliers.
Product Assortment Examples
Let’s take 2 examples for product assortment choices, and see how the difference in depth & breadth will reflect on the final assortment.
Higher Product Breadth Example
Instead of buying two different styles with 5000 pieces each, you will now increase the breadth of your assortment and carry four different styles with 2500 pieces each or 10 different styles with 1000 pieces each.
(remember: your buying budget is fixed).
This strategy is going to require dealing with suppliers that accept lower quantity per style, but will give your customers a bigger variety to choose from.
Higher Product Depth Example
On the other hand, if you go for lower breadth/higher depth strategy, you will have to pick and choose between different products/styles and invest more in the styles you pick.
So instead of spreading your budget over 10 styles and buying 1000 pieces each, you will now pick only 4 styles and buy 2500 pieces each.
This strategy would mean that you are less diversified, and a wrong choice could have an amplified effect on your sales.
To implement this successfully, you have to track and analyze your sales data carefully and make your product/style decisions based on them and make sure to adapt and adjust as you go. You will also need to keep an eye on changing trends in your retail segment to spot new options and options that are getting out of style fast enough.
Depth vs. Breadth by Location
Depth vs. Breadth decision will also vary from store location to the other, under the same brand.
Not all stores are the same, and so not all stores should carry the same options. The buyer/merchandiser will make his own decision in creating the right assortment for each store, based on many factors, such as store size, location, customer profile,…etc.
Product Assortment Strategy Considerations
We have discussed before that buying is the most important retail function. This is because decisions made at the stage of buying will ripple down to sales and financials and their effects are always amplified and take very long to rectify ( with purchases in fashion typically done 6 months in advance).
This is why, while making the choice between depth vs. breadth, the buyer or category manager needs to take several things into considerations:
1. Store Size & Visual Display
Small retail stores by default will have to carry fewer items on display, and then rely on a good replenishment system to stay stocked all the time.
If the store you are buying for is small and you go for a broader assortment that cannot be fully displayed on the floor, this would mean that you are going to keep a lot of those products “hidden” at the warehouse or in the stock room until the stores have room for them.
This is poor usage of inventory money and wold mean longer sales cycle and lower inventory turnover.
Rather, make sure to buy the right amount of options the store can accommodate and use the budgeted amount in stocking enough inventory for replenishing those options, so you don’t run out of stock prematurely.
You can decide on the number of styles or options the store can carry by looking at the store & fixture layout and counting how many display arms/shelves or display units the store has. Then work it backward from there by calculating how many styles this can carry at once, and how many pieces per style.
It is very important that the product assortment strategy goes hand in hand with the display and visual merchandising strategy, or otherwise the stores could look empty due to few style options or having repeated displays just to fill the space.
2. Retail Segment & Product Category
If you are buying for a niche or specialty retailer you are, by default, limited to the variety of products you can carry.
For some product categories, such as shoes and bras, you will find that for each style you have to buy many sizes. For example, one bra option can carry 20 sizes.
This is a challenge for these particular categories, because for each style you carry you will already lock a lot of money into all the different sizes, so you will be able to display the full size range and keep it stocked adequately.
Failing to allocate the adequate amount to each style would mean broken sizes after only few days of launching.
3. More Is Not Always Better
Research has shown over and over again, that giving customers too many options can lead to analysis paralysis, and this might mean dropping out of the purchase process altogether.
In fact, at one of our ecommerce businesses we have studied the behavior of customers by giving them the option to buy a ready-made design on a T-shirt vs. creating their own custom design.
We found that the majority of customers opted for ready-made designs after trying to come up with a design themselves and endlessly trying to choose from all the different colors, fonts and logos in the design software.
The trick is to give customers just the right amount of choice to appeal to as many customers as possible, but at the same time not too many options to get them confused and paralyzed to take action.
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Read More On:
- Product Sourcing
- Open to Buy: How Much Inventory to Buy?
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- Gross Margin Return on Inventory (GMROI)
- Category Management
Retailer & Founder of Retail Dogma, Inc.
Rasha has 14 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She’s lived in 4 different countries, speaks 3 different languages and holds an MBA in Strategic Management & Marketing.