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Retail Top 100 2012, No. 7: Assortment localization

January 31, 2013

As consumers continue to trim spending and do more of their shopping online, big-box retailers are moving to smaller stores to reduce under-utilized space and stay profitable. At the same time, consumers are treating retail stores as showrooms where they can test-drive merchandise before making a purchase. Whether or not they purchase in-store, shoppers will increasingly turn to their mobile devices to check for better pricing or selection before making that purchase.

As a counter to both of these trends, proactive retailers are utilizing sophisticated communication tools such as assortment planning, flow modeling, price optimization, promotion optimization and size optimization to create custom assortments based on each store’s local characteristics and demographics. By capturing information about the specific buying patterns of their shoppers, they can efficiently cater to each store’s particular needs.

John Seidl, a partner at Kurt Salmon Associates, argues that, as U.S. consumers become more diverse, they tend to rebel against the one-size-fits-all retailing models. By utilizing the concept of store assortment localization, Seidl notes that retailers have been able to boost sales by 40 percent to 50 percent and carve out a solid competitive advantage for themselves.

Assortment localization can be an effective way to build intimacy with customers as the economy puts more pressure on retailers to manage their inventories closely. Scott Welty, vice president of retail industry strategy for JDA Software Group, notes that the trend toward shoppers using brick-and-mortar locations as showrooms requires retailers to stock the optimal localized assortment range and maintain appropriate quantities for each store. “Having the right item in the right store at the right time helps maintain and improve customer loyalty,” says Welty. “Providing a superior customer experience by ensuring that ‘available to promise’ meets the demand and geographic location of the customer, no matter how or where they ultimately buy the merchandise.”

Download the complete Top 100.