Why the Right Product Selection Is Crucially Important for a Retailer
Correct product selection and stock are crucially important for a retailer. Nobody can offer the customer everything at once, but the available product selection should provide sufficient alternatives. If a client seeking a dress does not find an appropriate one in red, there should be option to choose a blue one instead.
According to Storenvy, sales success requires offering the right product in the right place at the right time and for the right customer. The right product selection powers energetic growth not only of large companies, but propels small companies, too.
A retailer can increase the number of buying customers by changing and improving the product selection. Selection corrections assist the customer in finding the product they were looking for or a sufficiently similar one that satisfies their needs, says Harvard Business Review. It is advisable therefore to analyse the buyer’s critical decisive factors while in the shop – product price, brand, size, taste, colour, etc. Also, it would be wise to think about the alternatives the customers could choose from if they fail to find the perfect product.
If a dress is not available in the right size, the customer is not very likely going to buy a larger dress. But she may opt to buy a red dress instead of a blue one, if there is no blue in the product selection. A client cannot compromise on tyre size, but given specifications match the requirements, opting for another brand is possible. Product selection should therefore always consider that some customers will opt to buy the second-best solution when the perfect product is not available.
Market surveys help to understand the customer
Market surveys are recommended to sense the customers and their needs. A market analysis will provide the retailer with ideas on which additional products to offer as well as how to plan and implement their marketing activities. The analysis should encompass the competitors – which products they offer, for which price and to whom, and the customers – what the consumer preferences of existing and potential customers are and which products should augment the existing offer. Market analysis can be done by conducting interviews, surveys and studies as well as by using focus groups.
A retailer should remember that their product offering defines their shop’s customer, according to Chron. The more precisely the target customer is defined, the easier it is to select the products. Selecting young, single women as the potential target customer group for example, instead of all women, is beneficial as young women have more money to spend on their personal needs and desires compared to mothers.
More is not always better
Often, customers seek only one or two specific items in a shop and don’t really pay much attention to the rest. A narrower product selection that satisfies the customer’s needs permits the retailer more efficient operation as stock reserve costs are reduced.
In addition, removing the goods of no interest to a regular customer from the product selection allows improving the buying experience – at the end of the day, the customer lives a busy life and the easier the shopping process, the more enjoyable.
Choosing a product means more than just forecasting its sales potential, Chron reveals. Certain goods are required as a magnet to attract the customer to the shop. Others are beneficial because of their high sales turnover and some are required because of their high profit margin.
A good idea is to offer products that regularly bring a customer to the shop as these products create the opportunity for the customer to make additional purchases to the initial intention – in other words to make an impulse purchase. The scheme only works if you offer products that the customer really does need on a regular basis. Young mothers purchase diapers daily for their babies, so to get them to the shop offering them diapers below the competitor’s or even cost price is wise. The diapers need to be surrounded by higher profit margin products such as books, clothes, toys and other baby products – the customers looking for diapers will definitely notice other products in the vicinity.
Expensive vs cheap
Generally, cheaper products correlate to a higher sales volume, whereas expensive products have a higher margin creating lower sales volume, but a higher profit. A balance should be sought between products with higher sales volume and a lower margin and products with lower sales volume and a higher margin, satisfying the needs of the customer base at the same time. Choosing the products requires considering the brands you offer and the current market situation. The prevailing conditions establish whether offering affordable products at a better price is advantageous over premium quality products at a higher price. The product selection should offer a plentiful choice to both cheaper and premium quality product customer groups.
Customers’ needs change faster than ever before and the seller should keep their product selection up to date – take note of what the customers ask for and what the general market trends are. Take into consideration that the gut feeling may not always be right – do not invest large amounts into new products before testing them out and seeing what the customer really thinks about them.
Erply reports help analyze exactly which products have sold better
“By weekdays“ – provides an overview by day to show the best-selling day.
“By hours“ – provides an overview by hour to show the best-selling hour.
“By Customer“ – provides an overview of the sales by customer group to indicate the customer group that could be targeted during the next campaign to boost sales.
“By Location“ – provides an overview of the sales by shop.
“By Product“ – displays the products sold during the specific period.
“By Product Group“ – shows the best-selling product groups and the product groups that could be targeted during the next campaign.
“By Document” – provides an overview of the sales by document and displays the sold amounts, the discounts provided and the VAT rates applied. “By Document“ is a good choice for discovering any differences in amounts – for example, if the cash and receipts report shows one amount, but the sales and sales turnover report shows another, the difference can be quickly discovered by comparing the two reports.
“Sales Summary” – displays the sales amount for the selected period and the VAT paid on sales. When a longer period is selected, the sales amount is displayed by calendar month and the specific VAT rates applied are also displayed.