How to Use Data for Effective Product Assortment Decisions

Top-line growth through expansion areas is often the go-to but prioritising assortment optimisation can yield far greater benefits for long-term success. Attaining new top-line growth may seem simple—launching new categories or stores can quickly boost year-over-year revenue. However, without focusing on your business's current inventory health, such actions can lead to long-term complications and a less sustainable business. True merchandisers 🤓 find great satisfaction in revitalising and optimising struggling categories, locking in reliable and sustainable growth in a dynamic retail landscape. To safeguard profits, drive revenue, and enhance sell-through rates, all while maximising your product's potential, consider the following strategies: 💡 Leverage Inventory Health Check Metrics Gain a deep understanding and competitive edge when you have clarity on both driving factors and hindrances to business performance. Favourites include: Newness %, Sizing Availability, Core Line Out-of-Stock Rate, Markdown: Velocity & Depth of Discount, GMROI at all levels. 💡 Ensure Comprehensive Product Attribution Enrich product data with great attribution to accurately gauge customer demand by any product facet. This is invaluable insights for decision-making. 💡 Optimise Price Points Identify and capitalise on the pricing sweet spot, not only the sweet spot that’s acquiring you customers but also the sweet spot which is upselling and retaining customers for you. Invest and build on these and adapt as the market or customer base changes. 💡 Identify Core and NOOS Lines Prioritise Core and Never Out of Stock items to maintain consistency and meet ongoing demand. These items usually have higher margins and should have great stock turn due to predictable demand. 💡 Focus on Top-Performing Products Apply the 80/20 rule, concentrating efforts on the top 20% of products contributing to 80% of sales, while streamlining the long tail. The goal is to continually adapt and meet the customer where they’re at in terms of their demand for product. Focusing on key metrics that matter empowers teams to drive sustainable growth and adapt to the evolving market dynamics effectively.

SKU Rationalize aka sku rat: “Review each sku (style-color-size) in your assortment and determine based on sales, profitability and strategy if you should keep or let it go” It sounds simple. Numbers don’t lie but we try to defend things we love or feel we need. Removing emotion is step one. The Reebok Princess in 1999 was the ultimate loss leader. I had to have it in my assortment - it was the Princess! BUT we were losing $1 every time we sold a pair. If you cannot negotiate or create a strategy to be profitable - time to let it go. Selection is important for retailers and is one of Amazon’s top KPIs .   Just because Amazon wants full selection does not mean brands have to give it them.   Managing selection is essential to a profitable business. Having too large of a selection puts a strain on resources and margin. Focusing resources on the items driving 80% of your business yields higher profit. Such as: ·      Time ·      Content and asset creation ·      Maintaining catalog and PDPs ·      Building, shipping, holding inventory ·      Advertising costs ·      Promotional spend To name a few…   How many items can you maintain at a high level and be profitable? Which styles are draining your resources and bottom line? If you are not sure, you are overdue for a sku rat.   Here are the steps I recommend:   1.    Remove emotion. Review the data.   2.    Align on brand strategy. Who is the target customer? What is the pricing model? What is the margin goal?   3.    Review the 80/20 - what is the 20% of styles that are driving 80% of the business?   4.    Review profitability at the sku level – are you making money? If not, why and can you fix that? If not - let it go.   5.    Of that 80/20 are there any emerging styles that are aligned with the strategy? Are there any in the top 80% that are declining and will fall out of the top based on current trend?   6.    What new items are coming into the assortment and where do they fit into overall assortment and strategy?   7.    Repeat process ideally monthly but at minimum quarterly to stay ahead of buying cycle. How often do you review your assortment/catalog? What steps would you add? #retail #amazon #amazonfba

𝐇𝐞𝐚𝐝, 𝐁𝐞𝐥𝐥𝐲, 𝐓𝐚𝐢𝐥 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬 𝐟𝐨𝐫 𝐅𝐞𝐰𝐞𝐫 𝐎𝐩𝐞𝐧-𝐭𝐨-𝐁𝐮𝐲 𝐂𝐨𝐧𝐬𝐭𝐫𝐚𝐢𝐧𝐭𝐬 Over the years, we’ve analyzed merchandise for over 700 different retailers and consistently observed a similar performance distribution. The top-performing products (20%) account for 55% to 60% of category sales, while the bottom 20% contribute just 5%. Understanding this distribution is key to aligning merchandising and supply chain teams. We call this pattern Head, Belly, Tail. Three quick takeaways: 1. Focus on the availability of the Head in every assortment group - they are the fuel of your business. 2. Lean first-time allocation for anything not pre-identified as a Head product. 3. Reduce the Tail from 20% to 10%, but don’t go lower, or you risk compromising sales. By following these principles, retailers can ease OTB constraints, enhance merchandise presentation with fewer compromises, and create a better shopping experience. And with deeper statistical analysis, we can predict in advance which products will be in the Head or the Tail - helping retailers make even smarter assortment decisions.