Store Assortment
07.02.2017 18215

Store Assortment

You can and should manage the assortment in any organization - both in a powerful international network and in a private small store on the outskirts, regardless of the company's product specifics and structure. Regardless of the crisis. An unstructured and unmanaged assortment can plunge a company into crisis in the most favorable economic environment.

Ekaterina Buzukova Ekaterina Buzukova - Russia's leading retail assortment management consultant, category management specialist, business coach, seminar host, author and co-author of the books “Assortment Management in Retail. Category Management ”,“ Merchandising ”and“ Procurement and Suppliers ”.

In one ancient textbook of military art, a definition is given, the essence of which is that strategy is the arrangement of troops before the battle, while tactics is the movement of troops during the battle. This definition seemed quite acceptable, as business more and more resembles a battlefield - with competitors for a large market share, with suppliers for better deal conditions, with new laws, regulations, government bans or permits, with landlords and tenants, and even with buyers - for their attention and wallet.

But at its core, all the activities of the company - assortment and procurement policies, personnel policies, sales methods and distribution channels, marketing policies - these are tactical measures aimed at achieving global strategic goals.

You can and should manage the assortment in any organization - both in a powerful international network and in a private small store on the outskirts, regardless of the company's product specifics and structure. Regardless of the crisis. An unstructured and unmanaged assortment can plunge a company into crisis in the most favorable economic environment.

The strategy is to ensure that management clearly understands the ways and means of achieving quantitative (financial) and qualitative goals. This is precisely the essence of developing a strategy - in what way will we achieve a turnover of, say, in 1 a million rubles a month? What do you need to do for this? Which competitors to consider, what and which buyers to sell, which suppliers to choose as partners?

If we work using a pseudo-strategy of "how it goes", then sooner or later we will be faced with such circumstances that can seriously affect our business. According to statistics, only five percent of the total number of newly created enterprises can be considered successful. About a third of new businesses are closed during their first year of operation. Why? Precisely because the leader did not show due attention to the strategy of the enterprise, letting the situation take its course, and deciding only current affairs. Successfully solving operational problems (negotiate, take out, deliver, install, print, pay, clear customs, hire, fire, etc.), they did not see the main thing - what the consumer demands and the market dictates.

Assortment formation How is assortment usually formed? A supplier’s proposal appears, it is considered by the purchaser and commercial director, it is acceptable and a narrow assortment is imported for testing in small batches. Then, under a successful set of circumstances, the demand for this product begins. After some time, sales begin to demand more and more goods and it is good if the deliveries of goods keep up with demand. And after some time, the assortment of 10 items brought to the sample turns into 100 items, of which 20% is a clear illiquid item, brought back again, “to the sample”.

Who, if not the buyer, knows that the range has a tendency to uncontrolled growth! We do not have time to come to our senses, as we cover our assortment with shells as a ship.

Required to legitimize their relationship with the range. Based on the competitive strategy, the company should have a document defining its assortment policy. The general provision on assortment policy will serve as the basis for further work with the assortment.

Typical difficulties in assortment management

Carrying out assortment policy, the company always faces some tactical difficulties. For example, inadequate qualifications of the personnel in charge of procurement, or a difficult supplier, delay in deliveries, or the consequences of the adoption of the new excise duty law ... There are enough problems that can nevertheless be resolved if there are no strategic mistakes in the assortment policy.

As a rule, such critical points can be:

1. Lack of a coherent and uniform strategy for the development of the company for all employees. Perhaps there is a strategy, but it is in the head of the first person of the company, who does not consider it necessary to share it. Or the strategy is blurred and spelled out according to the principle "We sell everything for everyone and our main task is to earn as much money as possible by any means."

2. Lack of a specific person responsible for assortment development and management. As a rule, there are persons responsible for procurement, for sales, for marketing, for logistics. And the concept of "assortment" remains unreached and is not reflected in the job description of the commercial director. In the practice of successfully operating companies, a commercial director or a person with the function of managing category managers (the head of the sales department, the head of the procurement department, etc.) is responsible for the assortment. This responsibility should be spelled out in the regulation on the formation of the assortment (see above).

3. Lack of service, emphasis only on the product and the physical properties of the assortment (width, depth). Yes, the product and the product itself is good, but the current conditions of competition lead to the fact that the product itself does not have that value. This also becomes part of the range, paradoxically as it sounds. A service is the same product of a store, it is also a product that must be sold.

4. There are no exclusive or unique items or services in the assortment. If there are none, then how do we differ from our competitors? Why should a buyer come to us and not to a nearby store? Uniqueness is a “hook” that makes the buyer come again and again.

5. The assortment has not been updated for a long time (stagnation of the assortment). There are no new goods and services in the near future. Updating the assortment not only satisfies the need to try new things, but also allows you to always maintain the optimal ratio of goods with different duration of the life cycle.

6. High dependence of sales on seasonal fluctuations. If we have sales only in winter (for example, we are the “Skis” store), then what will be sold here in the summer? Two development options - in the spring, close the store and all go on a six-month vacation, rileatherg falling overboard in the autumn of the business. Or reconsider the store’s concept, name it “Skis, Bicycles, Rollers and Skates” and sell a seasonal assortment, but pick up your own product for each season.

7. The assortment is formed by goods from suppliers-monopolists. In this case, we become dependent on their distribution policies and prices. No comments.

8. Lack of clearly formulated and well-known criteria for employees to assess the quality of goods and services provided by the company. In fact, this is the absence of the rules of the game by which we play. What is good and what is bad for the buyer? How do we relate to the amount of marriage, to returns? We consider this acceptable and, if so, to what extent? Work standards should be clearly defined, spelled out and all staff should not only be familiar with them, but also agree.

Assortment Adjustment

In a crisis, you can reduce the presence in the line of fashioned and expensive goods, low-turnover goods, new products and retention products. However, it is not worth completely abandoning new products and retaining products, since the percentage of customers who refuse a store due to a reduction in their usual assortment can reach 15-20%. The share of goods to increase the volume may, on the contrary, increase (the trend is growing towards economical packaging and economical purchases). The share of goods with constant demand should not change. The number of profitable goods may decrease slightly. When introducing new products and profitable goods, there is a danger of stagnation of the assortment. Sooner or later, the crisis will end, and the buyer's needs will return to the previous level and possibly exceed it.

Therefore, the policy of reducing the assortment should be thought out in order to be able to quickly develop categories towards a high segment. People’s need for new products is almost indestructible. After the crisis, it will become especially relevant. Therefore, a willingness to expand the range should be present. As soon as there is a demand trend for new products, respond immediately.

Economy Savings

The experience of the past crisis shows that:

1. There will be a drop in demand for goods not of prime necessity, the buyer will refuse some expensive and status goods. A decrease in population incomes will lead to a situation of consumption of cheaper goods, to a lesser extent.

2. The share of purchases of non-food items will decrease and the demand for services and entertainment will decrease significantly. In the purchasing budget, the share of food products will increase slightly (due to the redistribution of income).

3. Less attention will be paid to the quality of goods and services, more attention will be paid to prices. Only those “anti-crisis” actions that will direct their focus on the final cheapening of goods for the buyer will be effective.

4. Demand in hypermarkets and discounters will hardly change, although there will be a redistribution towards the purchase of cheaper goods. Specialty and boutique-style stores will feel a significant decrease in demand.

What to do:

1. Centralize the processes of purchasing goods and assortment management as much as possible. The situation when the assortment is formed uncontrollably by the store directors at their discretion (“what to see, how it goes”) must be eliminated.

2. Evaluate the possibilities of the format of your network and the development trends of the assortment - in depth or in width? Eliminate network sprawl or multi-format, focus on a single viable format. 3. Focus your efforts on assortment optimization. Remove categories that do not <profitable, do not retain the buyer, low turnover or not supported by credits from the supplier.

4. Reduce non-profitable product lines that are not flow generators. Reduce the introduction of new products to the assortment (however, do not stop this process at all). Reduce the number of products holding the buyer. Conclusion subject to low-cost goods to maintain the image and affect the impulsiveness of the purchase.

5. It is possible to introduce elements of categorical assortment management (a single function of procurement, pricing and sales control) if this system is not yet implemented in the company.

6. Carry out inventories, devote more time to operational accounting, work with complaints and marriage, work to identify illiquid assets. Motivate staff for these events.

7. To negotiate with suppliers on a possible deferral of payments, repayment of loans in installments. Upon reaching these agreements, strictly observe payment schedules (as you know, compliance with obligations gives more bonuses than the immediate benefit of delayed payments).

This article was published in the 125 issue of the print version of the magazine.

You can and should manage the assortment in any organization - both in a powerful international network and in a private small store on the outskirts, regardless of what the company’s product specifications and ...
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