🎓 Definition
An assortment cluster refers to a grouping of products, often based on specific criteria or characteristics, designed to cater to a particular segment of shoppers.
The goal of creating assortment clusters is to optimize product offerings based on the preferences, needs, or behaviors of targeted customer segments.
Here's a breakdown of the concept:
- Purpose: Retailers use assortment clustering to cater to local preferences, customer behaviors, or specific demographics. For instance, stores in upscale neighborhoods might have a different product assortment than those in more budget-conscious areas.
- Based on Data: Assortment clustering is typically driven by data analytics. Retailers analyze sales data, customer feedback, and other relevant metrics to determine which products are most relevant for a particular store or location.
🧪 Example of Assortment Cluster
- Geographical Cluster: A store in a coastal city might have an assortment cluster for beach-related items, while one in a mountainous region may focus on hiking gear.
- Demographic Cluster: A store in a university town might have an assortment cluster catering to students, with products like affordable furniture, study aids, and instant foods.
- Cultural/Ethnic Cluster: A Retailer might create an assortment cluster focused on specific ethnic foods such as Thai or Chinese to cater to a significant population of that ethnicity in the area.
❓What is used for
- Competitive Advantage
Retailers that efficiently utilize assortment clustering can create a distinct edge over competitors by offering products that are more attuned to local or specific group demands.
- Rapid Response to Trends
Assortment clustering, especially when backed by real-time data, allows Retailers to quickly spot emerging trends and adjust their product offerings accordingly.
- Efficient Space Allocation
Retailers can utilize shelf space more effectively by allocating more room to high-demand products in each cluster, thereby maximizing sales per square foot.
- Loyalty Program Enhancement
By understanding popular assortment clusters, Retailers can design loyalty programs or rewards that specifically cater to those preferences, making the programs more appealing to customers.
- Tailored Marketing and Promotions
By understanding the specific product clusters preferred by their customer base, Retailers can create more effective marketing campaigns and promotions targeted towards these preferences.