It is trade show season. Retail owners and buyers are visiting various exhibitions and events to identify products to merchandise in their stores in the coming months. Recently someone asked me the following question: “I’ve seen so many great new products, I can’t stock them all. How should I decide which products to include in the range to make sure we have what our customers want?”
And here is a summary of what I answered!
Do the new products match with your product / range strategy?
When considering listing a new product / range I recommend that retailers reflect on their company mission and who their ideal customer is. The retailers should ask themselves if the product is in line with their positioning and their product / range strategy. How do these new items meet their business objectives? If they simply loved a product, but can’t see how it fits in with their offer, then that should rule the product out immediately!
Is there enough space to effectively merchandise additional SKU Count, or, should other products be delisted?
Next, the retailer needs to think about the total number of items that they can merchandise in their store. If the new items are ideal for the offer, but there is not sufficient space to effectively merchandise them, it will be necessary to delist a less ideal product from the current range to make way for the new item.
There are further implications from this – the delisted item will need to sell through in time for the new item to replace it. If the stock level is high compared to the rate of sale then the weeks of cover calculation will show that there will be residual stock when the new item arrives. If so it may be necessary to reduce the price of the old item in order to clear the stock. The retailer needs to consider the impact that this will have on their margin. If the retailer does buy stock of new items whilst clearing down old items it will also be necessary to consider such things as how much stock commitment that will be. There will be both financial impacts (cash flow tied up) as well as physical impacts (where will you store it all).
What is the RRP for the new product and how does that fit in with the existing price architecture / price ladder?
If it doesn’t belong within the price architecture, or makes the price ladder confusing then it may mean that the retailer needs to rethink their overall pricing policy. If the retailer is absolutely certain it is an ideal product, then it may be more of an issue with their current range and pricing in totality.
Before adding new items to the range it is critical to consider the impact it will have on the rest of the items in the assortment – this was discussed in another blog, focused on price and assortment elasticity.
Buying, merchandising, range, space and stock planning processes are fundamental to successful retailing!
It touches on the buying, merchandising, range, space and stock planning processes that are fundamental to successful retailing (and all of my favourite topics!)
What a retailer presents on their shelves, and how they present it, is the outward representation of what that retail business stands for in the eyes of the consumer! Consumers will judge the retailer based on their products, price points, service levels and standard of visual merchandising.
In summary, as long as the retailer has considered the impact of adding new products, and the reasons why they are making changes to the range, then they will come to the best decision for their retail business and ultimately for their customer.