Strict selection. How to create a portfolio of brands for multi-brand retail
17.10.2017 7964

Strict selection. How to create a portfolio of brands for multi-brand retail

A multi-brand store is a more flexible and agile business model than a single-brand store. But this format has a number of its own characteristics, the main of which is a correctly formed portfolio of brands and a balanced assortment. Meanwhile, almost 90% of retail companies devote insufficient time and energy to forming the assortment, as a result they incur financial losses, overstock warehouses with “unsuccessful” models and lose customers. To achieve the desired result - to form a brand portfolio in the optimal proportion and offer the consumer exactly what he needs - a systematic approach is needed. Practical recommendations for creating a brand portfolio are given by Jacob Treskov, Head of SOHO Fashion.

Jacob Treskov Jacob Treskov - CEO of the international distributor SOHO-Fashion 

In a crisis, with an unstable economy and sharply falling consumer demand, the formation of a brand portfolio and selection of assortment becomes one of the main tasks - after all, every seller aims to sell goods. Creating an assortment of a store, filling it with models from collections of different brands, it is very important to do this based not only on your own opinion, but on the results of the analysis of many important factors. Two things must be remembered: firstly, the store itself is already a brand, and the product brands presented in it only complement its uniqueness, form its image (the buyer identifies the store by brand), and secondly, the assortment and portfolio of brands cannot inflate to infinity. They should be wide enough, but not blurring the boundaries of the authenticity of the store. Choose the assortment for your client as carefully as the best foreign department stores do: thanks to the painstaking work carried out by them, they are trusted by a huge audience of customers.

There are three types of factors that are important to consider when creating a brand portfolio of a retail chain:

- features of the region;

- characteristics of the point of sale; - a portrait of a potential buyer.

When deciding to work with a new brand, it is important to adhere to one rule: you should not buy brands that are completely unknown in your region and have little chance of becoming popular without significant investment in building the right brand perception and promoting it. Conducting advertising campaigns to bring new brands to the market is not the task of the retail store, it is the competence of manufacturers and their official distributors.

Geographical nuances

If you are developing your own regional retail network (or planning regional expansion), then it is important to understand the following: under the vague wording “regional features” there are a lot of details and subtleties, the understanding of which will help to avoid significant financial losses.

First, be sure to consider the socio-economic level of development of the region: the assortment of a store in Surgut will be significantly different from the assortment of a store of the same chain in Ryazan.

Secondly, always take into account the geographical location, our country is very large, different climatic zones are represented on its territory, and this should not be forgotten. For example, in Kuzbass everyday light shoes will not be sold, because on the city streets it is rather dusty and dirty, it rains a significant period of the year. If your target audience is above average wealth and moves exclusively behind the wheel of a car, it would seem that there is no need for a large selection of winter shoes with fur. But if you open a store in the northern regions of Russia, then expanding the range of winter shoes is vital for the store: the longer and colder in the winter region, the wider and larger should be the choice of warm shoes.

Right on target

To fully meet the expectations and needs of your customer, you need to evaluate the point of sale itself - where your store will be located, and how its location will affect who your customer will be and what he will look for on the shelves of the store. Obviously, the audience of different shopping centers is significantly different from each other even in the same city. For example, the Moscow retailer opens two shoe stores - in the AFIMALL City shopping and entertainment center, located in the zone of the Moscow-Moscow international business center, and in the Europark shopping center on Rublevskoye Shosse. Obviously, the assortment should be different: in the first case, the bulk of the buyers will be bank employees, company employees and other office workers, in the second - people who have country houses on the prestigious Rublevka.

You should seriously think about how loyal your store’s audience will be due to its location. High traffic and a constant influx of new customers (as, for example, in tourist places such as the metropolitan Okhotny Ryad shopping center, located in the very center of Moscow, within walking distance from Red Square) will not allow the store to work within the framework of loyalty programs and increase the base of regular customers. In such “passing” places, customers will be attracted by bright, rather than classical, basic models, and purchases will be more emotional rather than deliberate, but this has a positive point: there will be a rather low percentage of return.

It is important to evaluate the bestsellers of sales and the period of their “work” every season, but even if your assortment is made up of bestsellers of different brands, some of them will sell well and others will sell poorly. The consumer in this sense is unpredictable. Selling the 65% collection before sale out is the ideal maximum in retail.

Portrait of your real buyer

Before forming the store’s assortment, it’s necessary to clearly understand the characteristics of your real customer in this particular place: gender, age, income level and anthropometric characteristics of customers are extremely important. Of course, it is not so easy to describe the preferences of clients - sometimes, this can only be done empirically. But there are several common features that will help in creating a portrait of your average buyer. For example, if a large part of your audience is people older than 45 years, then it is probably better to sell models that are wider in shape and design - due to the fact that for many men and women the leg deforms, changes (for example, a “bone” appears on the thumb). The same goes for high-rise shoes. If your audience is youth, then the assortment of black is clearly not your direction. Young buyers prefer something technological based on materials, lightweight and matched in style.

Choosing the assortment and arrangement of goods in the hall, you need to keep a few things in mind:

- how your range will meet the expectations of the audience of the shopping center and your store;

- how the assortment will be displayed on shelves and display cases;

- what kind of support in the sales calendar for the whole season can you provide him.

Love for discounts

Most Russians love huge discounts and do not take into account the real value of the goods. It is impossible to deal with this; it is dangerous to play it. We recommend that our franchised partners not give in to the temptation to leave for the early “sales”, but create special offers where the client must either “earn” a discount or use it with a restriction (for example, get a discount on certain models with an interesting condition for a limited time period). However, you cannot work with discounts during sales and you cannot artificially lower them either - you will have large inventory left over. This must be understood by regional retailers, who, unfortunately, are still afraid to provide 50 percent discounts in February and July and overstock their warehouses for a year and a half, so that they cannot then purchase and deliver new collections in the required amount.

Gathering information and going to the people

When a retailer arrives in a new region, it is rather difficult at first to understand who the buyer will be. However, it can be calculated using “competitive intelligence”: identify the market players closest to you in spirit, analyze their actions and, based on their positive or negative experience, form the future assortment. Understanding how successful your competitor is and assessing your sales is not so difficult. If there is no open information, it is necessary to collect it: statistics of attendance of the mall, traffic near the point of sale. You can talk with neighboring points of sale, collect people's opinions: do not be afraid to communicate and exchange information. If you collect it in the right amount, it will most likely be close to reality. Do not check the result solely in your business, connect someone else's experience to the analysis and evaluation of your potential successes.

This article was published in the 128 issue of the print version of the magazine.

A multi-brand store is a more flexible and agile business model than a single-brand store.
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