Merchandising and Store Clusters

Merchandising fundamentally is about getting the right mix of products on the shelves. For many retailers & manufacturers this can be a cumbersome process.

Some retailers still employ the concept of giving customers the same shopping experience regardless of geographic location. Many have made this consistency model their trademark.

However, many have shifted their approach to a more customized approach. This particular customization is the idea of using store clustering as a merchandising strategy.

Clustering is the idea of varying an assortment based on the clientele and/or location of the store. In some cases, regionally unique items may not perform as well as a national item. However, including these items in the assortment is a key factor in maintaining a regional identity.

Store clusters can also include variance due to demographics of the shoppers in the area. If the average income is lower in the area, you can put a higher focus on opening price point items. An opening price point item is the cheapest in price of any product line. Typically, this would be a control or private label item. When a large grocery chain made store clusters in their Ice Cream category. This focused on demographic based assortments. Lower income areas had more space dedicated to value / larger family size items. Higher income had more space dedicated to indulgence and novelty items. By doing assortment optimization, the retailer was able to provide a better shopping experience by catering more to the specific demographic of people living in the surrounding area.

Additionally, some retailers are also finding a need to make planograms & assortment store specific for even better merchandising. This generally gives each individual store input into what their customers want to see on shelf. Many retailers are making this change, offering shopping a unique experience that caters to their needs specific to the neighborhood they reside in. This store specific approach is tedious in executing and maintaining as it involves housing as many planograms as you have stores.