Assortment Distribution

🎓 Definition

Assortment distribution is deciding which items are sold in which store. This may sound straightforward, but finding the best distribution very often represents the low-hanging fruits of sales growth.

Common Challenges: Retailers’ Teams are often lost in mapping the distribution because of the complexity of:

Different Range Structures: Which products should be offered?
Store Formats: Which layout or type of store should be used?
Store Clustering: Grouping stores based on similar characteristics (store size, location, customer demographics, etc...).

The priority, for both Retailers and Suppliers, is to ensure that items that are both among the Top 20% of national sales and with less than 100% distribution be immediately distributed in all stores.

🧪 Example of Assortment Distribution

Let's consider a supermarket chain named "FreshMart" that operates 100 stores across the country.

FreshMart analyzes national sales data and finds out that "Organic Blueberry Jam" is among the Top 20% of products sold across all stores in the country.

Upon internal checking, FreshMart discovers that "Organic Blueberry Jam" is only available in 60 out of their 100 stores.

FreshMart decided that irrespective of the format or cluster, the "Organic Blueberry Jam" needs to be present in all stores given its national sales performance. They immediately start distributing it to the 40 stores that don't have it.

📅 Frequency

Reviewing items that generate top 20% of national sales every month or at a frequency that suits your market is a common practice. As the market changes, and what's in the top 20% might change as well.

❓Benefits for Optimizing Assortment Distribution

For Retailers:

Increased Sales: Retailers can capitalize on the popularity of products in the top 20% of national sales. By ensuring they're available across all stores, they can significantly increase sales.
Enhanced Customer Satisfaction: Customers expect to find popular products in stores. By optimizing assortment distribution, Retailers meet customer expectations, leading to higher satisfaction and loyalty.
Efficient Inventory Management: Retailers can prioritize stocking items with proven sales records, reducing the risk of overstocking less popular items.
Better Informed Decision Making: Regularly reviewing the assortment distribution provides insights into changing market trends, allowing Retailers to adapt quickly.

For Manufacturers:

Increased Production Efficiency: Manufacturers can adjust production lines based on the demand from Retailers, ensuring they produce more of what's popular and less of slow-moving products.
Effective Marketing and Promotions: Knowing which products are in the top 20% of sales allows Manufacturers to channel their marketing efforts effectively, promoting products that have a proven sales record.
Improved Forecasting: With regular reviews and understanding of the market changes, Manufacturers can anticipate demand shifts and adjust their production and supply chain strategies accordingly.