Assortment strategy: how to define your brand's product offering in supermarkets

Brands selling consumer goods are constantly trying to find the assortment that will maximize their revenue. This involves creating product lines that reach as many target customers as possible in order to achieve the highest possible turnover.‍

In this article, Sidely reviews the main challenges of the assortment strategy.

The goal? To help you define or redefine your product offering to improve your sales results.

And since there is so much to say on the subject, we have decided to break it down into three main sections: 

1. Definitions: a theoretical part, a bit more academic; 

2. How to build your assortment strategy: a process to guide your reflection; 

3. Knowing and understanding the assortment policies of mass retail chains.

Assortment Strategy: Concepts to Master

But then, what is an assortment in marketing?

The assortment strategy aims to select and manage the range of products offered to consumers. This involves defining the quantity, variety, and type of products to include in the assortment, as well as its width and depth.  

This approach involves the selection, management, and organization of the products you sell, focusing on how they interact with each other to best meet customer needs and enable you to achieve your commercial goals.

Thus, the assortment strategy encompasses creating a coherent set of products that complement each other, thereby contributing to the company's overall success in the market.

‍The assortment strategy is influenced by factors such as market trends, customer demand, brand strategy, and competition. For mass retail brands, the objective is to optimize product visibility and availability, while meeting the varied needs and preferences of consumers, and maximizing sales and profitability.

To do this, it is important to mix loss leaders and complementary products. The loss leader will allow you to generate volume, drawing consumers to your brand. You will then nudge them to purchase secondary products, which are generally more expensive. You need complementary products to sell. 

In practice, the structuring of the product offering is largely correlated with that of your competitors, your goal being to gain market share while standing out from what your peers are doing.

‍As you can see: the term “assortment” refers both to your company's product offering and to that of your distributors, who sell both your products and those of your competitors. That is why the last part of this guide will focus specifically on mass retail.

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Width and Depth of Product Line

To describe a manufacturer's offering or product line, we generally talk about width and depth: 

• The width of the assortment corresponds to the number of product categories you offer;

• The depth of the assortment refers to the number of product SKUs you will offer within each category.

💡 Example
An electronics manufacturer offers two product categories: alarm clocks and watches. 5 models of alarm clocks and 10 models of watches are marketed.
-> We can say that the assortment has a narrow width (2 categories) but considerable depth (up to 10 models for watches).

To determine the width and depth of your product line, you must conduct a study of consumer needs, but also of the operational costs for your business.

While defining the assortment is primarily a marketing task, it is clear that all divisions of the company are necessarily involved: finance, production, logistics, and sales, to name just the main ones.

Product Typologies and Their Role in the Assortment

It is also possible to classify your products by purchase typology. When a customer buys your brand, this purchase can involve several actions and decisions on their part, which are themselves influenced by their in-store journey. 

Two types of purchases exist: daily purchases are guided by rational reasons: habits, immediate need, price appeal, etc. Then come impulsive purchases, influenced by the external environment or desire: price, merchandising, promotion, emotional appeal, etc.‍

💡 Example
The weather is wonderful, and you decide to go to the beach.
Once there, you realize you don't have sunscreen. Fortunately, a shop had the great idea of displaying it prominently on a stand facing the path to the beach. This first purchase introduces you to a brand you have never bought before. The low price helped convince you to make the purchase.
But you have such a bad memory of your last sunburn that you decide, in addition, to buy a moisturizer. This time, you go inside the shop. And, faced with the considerable choice on the shelf, you find yourself buying a product from the same brand, almost by reflex.
-> In this example, the sunscreen played the role of a loss leader. The moisturizer can be considered a complementary product.

Mastering product classifications by roles is therefore important to build an assortment adapted to the target market, but also to ensure that your various SKUs, although intended for different uses or targets, always contribute maximally to overall sales, while avoiding cannibalization, meaning a situation where your products compete with each other, reducing the potential value of your sales.

To design an assortment strategy that meets your various marketing and sales objectives, you can assign different roles to your products: 

1. Leader or flagship product: this is the emblematic product of your brand, which serves as the foundation for your entire product range on mass retail shelves.

2. Loss leader product: this is often a simplified version of your brand's flagship product, whose role is to attract new customers through a more attractive price. By building brand awareness, it also helps promote other products with higher profitability.

3. Future product: an innovative or new product on which your entrepreneurial vision is based. Generally launched in a limited or special edition, its purpose—if successful—is to replace a current leader product.

4. Complementary product: it is linked to your brand's main product and helps increase turnover through complementarity.

5. Stabilizing product: it is generally launched to compensate for seasonal or chronic loss of revenue, playing a role in diversification and income stabilization.

6. Tactical product: a strategic product to counter competitors' attacks. It is not necessarily the most profitable, but it allows you to occupy the ground or position yourself in a niche.

Also read: how to choose and define your flagship product.

Ultimately, a good assortment strategy allows you to assign goals to different products: 

• Awareness: representing your brand image; 

• Acquisition: encouraging adoption through a trial purchase;

• Cross-selling: offering complementary products that increase the average basket size or customer value; 

• Retention: keeping a customer by being able to meet different needs;

• Proactivity: challenging your competitors on their home turf and guiding the market toward your commercial goals; 

• Profitability: testing different products to identify the highest potentials in terms of turnover or profitability.

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The Challenges of an Effective Assortment

The assortment obviously has a considerable impact on your sales, but also on your investments, inventory management, or production costs.

The first challenge of the assortment is linked to the distribution strategy. You will not offer the same assortments depending on the retail chains, even though you can sell your products in all of them. ‍

The distribution strategy does not stop at retail chains or even store tiers. It is also possible to reserve certain products for e-commerce or for your retail sellers.

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💡 Example
It is common to find specific beers in specialty wine shops that cannot be found in supermarkets. Simply because they are reserved for the former. Similarly, specialized running stores offer sneaker styles or colors that cannot be found on the brand's website or in more generalist stores like Decathlon or Go Sport.

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Benefit: ultimately, an effective assortment helps meet market expectations, but also those of your distributors, because your strategy will better align with their assortment policy. You have an advisory role with them because you know your range and market better than they do. Conversely, they know their locations and customers better and will know what is best for them. It is a balancing act: it is up to you to find the right balance. 

Risk: conversely, a bad assortment will have a proportionally negative impact on your business: unsold stock, storage costs, damaging your reputation with distributors... A bad strategy can be very expensive!

Thus, any brand operating in mass retail must think about its product strategy globally, and by considering the competitive landscape and brand positioning.

By knowing which products to launch and which role to assign to each, you give yourself the means to achieve the following marketing objectives: 

• Meet market expectations: take into account consumers' needs and preferences;

• Differentiation and positioning: stand out from the competition by building a clear and identifiable image;

• Sales optimization: maximize sales and profitability by finding the right balance between popular products and more specialized products;

• Cost management: production, storage, logistics, and marketing;

• Adaptation to the market: an assortment must remain flexible in order to adapt to market trends, whether in demand or competition; 

• Distribution: the structure of your offering allows you to determine the distribution channel and pathways. 

Now that we have covered the fundamentals, let's discover how you can design your assortment strategy.

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Defining the Assortment Strategy for Your Consumer Goods Brand

Your company's assortment strategy corresponds to its positioning and approach to the market.

💡 Example
A brand may choose to specialize in marketing a single product line in order to streamline its production, logistics, and marketing costs in a single niche and attempt to capture maximum value.
Conversely, a brand wishing to reach the largest number of consumers possible will tend to develop a wide variety of SKUs in order to reach as many customer segments as possible.

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It then becomes obvious that these two companies will not have the same assortment strategy.

We can now list the steps that allow you to find the right range of products relative to your company strategy and, above all, your market.

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Steps for Developing a Good Assortment Strategy

1. Defining Objectives: always start with the end goal, and in mass retail, there is no shortage of objectives: 

• Diversification; 

• Gain or retention of market shares; 

• Innovation; 

• Increasing sales;

• Customer satisfaction;

• Development of new segments;

• Strengthening brand image;

• Etc.

2. Conducting Market Intelligence: This point is too often forgotten, but customers do not necessarily know what they want. Supply also creates demand. They are not aware of new products coming onto the market. That is why it is important to look at what is being done abroad, the major market trends, and the underlying shifts that help understand new expectations and what might arrive in your market. 

3. Analysis of Customer Expectations: conduct in-depth studies of consumer expectations. You can conduct surveys or order them from specialized service providers. You will often need to understand the market on a macro scale (e.g., nationwide) or micro scale (e.g., local county);

4. Study of Sales Potential: not all customers have the same purchasing power. Similarly, basic necessity products do not sell at the same rate as impulse buys... Identifying a need is not enough: you must find opportunities; 

5. Determining Your Distribution Channels: depending on the distribution channels, you will not necessarily have the same packaging, supplier, or strategy. Your price/volume effect may also differ. Do you want a more high-end product that sells less or a loss leader that achieves high volumes?

6. ‍Competitor Analysis: examine what competitors are offering and identify gaps or opportunities in the market. This helps differentiate the company's offering;

7. Organize Your Product Categories and Lines: now that you have mapped the need, you need to know how to address each opportunity. Every product must correspond to one or more segments and contribute to overall turnover in a direct or indirect way;

8. Product Selection: Choose the products to include in the assortment. This step involves deciding on the variety (different types of products) and depth (different variations of the same product) of the assortment. ;

9. Defining a Coherent Pricing Strategy: the previous points allow you to establish your pricing strategy. This must include at least costs + the minimum margin necessary to "survive". Try to adjust your prices to maximize the overall objective, rather than wanting to sell every SKU at a high price;

10. Sales Projections: the realism of your projections is crucial because it leads you to size the manufacturing, logistics, and network animation channels.

11. Supplier Management: carefully select your suppliers and optimize your collaboration processes to ensure consistent quality and good product availability;

12. Communication: now that you know how to do it, you have to let people know. Marketing takes over to onboard distribution partners and handles promotion to the market.

13. Sales Space Planning: discuss with your distributors how to optimize how products are presented in-store. This includes shelf layout planning, product highlighting, and retail space management;

14. Monitoring: the assortment strategy process is an infinite loop. Give yourself the means to track results, and keep the strategic thinking going constantly. In mass retail, we will see later that assortment negotiation takes place... every year!

Let's finish with the side effects that most manufacturers encounter along the way.

Constraints and Obstacles to Defining an Assortment Strategy

• Perception and Beliefs: due to a lack of in-depth analysis, many management teams base their strategies on intuition, in reaction to competition, or worse, on a view of the market that is already outdated;

• Conservatism: innovation should always exist in your thinking. Relying on past successes often leads to missing major strategic turning points. Remember that a minimum of audacity is vital for your company;

• Lack of Analysis: sometimes, data to make good decisions is difficult to obtain. For example, in mass retail, brands often have to pay to get register sales reports, which provide them with data linked to individual points of sale, unlike sell-in data (orders by central buying offices);

• Insufficient Competitive Intelligence: your competitors can be bold, innovative, or commercially aggressive. Stay informed of their developments;

• Market Evolution: the same logic applies to consumer trends and behaviors. In the era of social media, trends accelerate exponentially. For some industries, responsiveness is key.

To understand what works, you have to go into the field. 

For all these reasons, the definition of your assortment strategy must try to limit risk as much as possible by relying on reliable data and solid processes.

Furthermore, it is a process of continuous improvement, whether you are trying to stabilize, defend against competition, gain market share, or specialize.‍

Finally, for brands selling in mass retail, your ability to collaborate with your distributors in a trade marketing logic will allow you to gather the essential data for studying purchasing behaviors.

You now have the keys to define your product assortment strategy.

And, as promised, we will now focus on the mass retail sector, where the term assortment takes on a specific dimension!

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Assortment of Lines in Mass Retail: What You Need to Know

Just like you, your distributors use the word assortment to refer to all the product SKUs they offer to their customers. The term can apply to the catalog made available by the central offices within the framework of integrated distribution, or to the order book, i.e., the SKUs offered by a single point of sale, a case found more often among independent retailers.

‍Product line width and product line depth are still relevant. But this time, a level of granularity is added: mass retail categorizes assortments into three main types: 

• The common core: it corresponds to the minimum number and is common to all points of sale of a retail brand; 

• The recommended optimum assortment: theoretically, it covers all consumer needs to meet their expectations, and is relative to the tier or variation of the store concerned; 

• The adapted optimum assortment: in this case, the retail brand's policy is an additional parameter that impacts the point of sale's assortment.

In general, you should know that your distributors are constantly trying to anticipate and adapt to changes in demand. Their assortment strategy, like yours, consists of trying to meet market expectations as much as possible, whether in width or depth of the product line. And as in your case, the ultimate goal is to maximize profitability.‍

If your objective is to be listed in mass retail, you must now understand how the assortment is decided in the mass retail environment.

Everything you have read in this article allows you to propose an “ideal assortment” to your distributor. But they still have to buy it!

In practice, the assortment is generally negotiated at the central office level, with the common core, meaning an obligatory assortment to be placed in stores. The central offices are most often regional.

Subsequently, integrated points of sale must on average respect 80 to 100% of the assortments negotiated at the central office. They have little room to maneuver to add complementary products. 

Independent retailers want to keep a higher margin of maneuver to adapt to their local market. They respect between 60 and 80% of the assortments negotiated at the central office.

Thus, product managers and department managers globally follow the instructions of the central purchasing offices that manage the assortment at their level. This is why we also talk about assortment policy. This role is often assigned to the merchandising manager.

The latter starts by defining which product categories or families should appear on the shelves of the various points of sale, according to their size, typology, or even in some cases their location. The common core favors flagship or leader products, due to their popularity and rotation rate. Innovation is also valued.‍

The second step consists of deciding on the depth of the lines. Here again, the rotation rate is taken into account, and the objective is to optimize sales per linear meter.

Finally, it is not uncommon for the assortment plan to include variations for stores that have specific characteristics (surface area, purchasing power of the zone, etc.).

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Adapting Assortments to Store Types

In mass retail, negotiations are annual and lay out all distribution criteria for the coming year. The assortment is reviewed on this occasion, taking into account seasons and market changes. It is therefore extremely important to analyze your results by chain, by point of sale, by category, and by product.

To develop your distribution strategy and analyze your performance with such level of detail, discover the application used by the leading brands in mass retail!

We hope this guide has helped you structure your thinking on creating—or reworking—your assortment strategy. Your commercial objectives in mass retail necessarily lead you to structuring a product offering that meets both the expectations of your target market and the assortment policy of your distributors.

That is why we took the time in this article to sweep through the definitions, challenges, and methods to follow to find the most strategic and profitable assortment for your consumer goods brand.