Assortment is probably the most important decision for a retailer after location identification. And assortment is to find out and decide the lists and categories of products to be displayed a store. The different categories a retailer carry is called retailers’ breadth, number of stock of Stock Keeping Units (SKUs) is called retailer’s depth and the stock of each SKU is called In-Stock rate.
Assortment planning is to find the right combination of product categories and SKUs at any given time. A retailer faces lot constraints in achieving maximization of sales and gross margin. The consumer demand for each category and sub-category, space availability for displaying products, budget for purchasing products and requirement of keeping a few products for each product category are some of the considerations and challenges in Assortment Planning process.
A retailer has to periodically review the assortment decisions as some of the above considerations undergo a change. For example launches of new products, seasonal fluctuations in demand forces a retailers to re-consider store assortments. Also, assortment is highly dependent on a retailer’s objectives and situations, for example assortment for a grocery retailer may not undergo a huge change during a holiday season but for a travel specialty store may require a significant change in assortment strategy.
Category: A category is group of related or similar products in a store. E.g. in a supermarket, all electronic items laptop, desktop, pen-drive may be included in Electronic Category. Category is defined to manage assortment effectively and can be defined based on consumers’ needs or purchasing habits.
Sub-category: Within a category items or products are further grouped together based on similarity or substitutability perspective. For example in a Category of Soap Category, sub category can be defined as bathing soap and washing soap.