(Having trouble with assortment creep? Contact me, I can help!)
Naturally all of us would like to sell everyone that shows interest in our products. After all, that is exactly why we are in business in the first place. In the retail business, trying to sell everyone that comes into your store or finds you on the Web would be unrealistic and you most likely would go broke trying.
The old saying, “you can’t be everything to everybody” comes to mind. All good retailers have an identity or image and target a certain demographic of likely customers to market to. You certainly wouldn’t go into a store specializing in work boots looking for water sandals just as you wouldn’t expect to find cowboy boots in an outdoor store. Even the broadest assortment that might be found in an outdoor store carrying many different departments is governed to a certain extent by consumer demographics, size of store, or even the financial strength of the owner.
Stores that attempt to please everybody so as to not miss a sale, over time end up with a condition I refer to as “assortment creep”. The symptoms are easy to spot; lots of random inventory, duplications, broken sizes on popular styles, markdown opportunities from past seasons that may have been missed. In other words, a whole lot of nothing! This is difficult to spot on paper or by just reviewing inventory reports. You may observe that the stock levels are over plan, but sales are slipping for no obvious reason.
One solution I often share with clients who are struggling with this problem is the creation of a “model stock”. The easiest way to picture this is by starting from scratch. Assume you are opening a new location or you have nothing at all in the particular category. In the perfect world, you would map out exactly the way this should look. What lines you wish to carry, how many styles, what sizes and colors, a varied assortment of price points, etc. Next, you will need to extend out the dollars and see how much you have at retail and compare this number to your open-to-buy plan. If you are way over or short, you may have to adjust the model by adding or deleting. Congratulations, you have just completed step one of your assortment plan.
Step two is to compare your “model” to what you currently have. This is where the process gets interesting. You will find that over time, you have added lines that perhaps now are not important. You might find that you have been filling into styles that once valid, are now slow turning and may no longer be relevant. You might even discover that you have been ordering too many sizes that in reality end up on the sale rack or worse yet are carried over from year to year. What your goal should be is simply to put your inventory back into balance. In essence, this process is much like rebalancing your stock portfolio or 401k.
Once you have determined where the holes in your plan exist, it is now time to correct the problem. This is the final step in the process. Now that you have identified items that are not part of your model plan, mark them down immediately and turn them into cash. Use the funds generated by the cleanup to reorder the sizes that may be missing from the key styles that you wish to go forward with.
Creating model stocks works very well with almost every category of merchandise that has the ability to be reordered or filled into. Try this concept if you find yourself suffering from assortment creep. You will be surprised how many fewer customers walk out empty handed.