What is Limited Assortment?
Limited assortment in retail refers to a strategic approach where a store offers a smaller selection of products compared to traditional retailers. This method focuses on stocking a reduced variety of items but typically includes the most commonly purchased goods or essentials. Here are the key elements and implications of this retail strategy:
Key Features of a Limited Assortment
Focused Inventory: Stores with limited assortments typically carry between 1,000 and 3,000 SKUs (stock-keeping Keeping Units), whereas traditional supermarkets might stock 20,000 to 30,000 SKUs. This focused inventory allows for a more streamlined shopping experience.
- Cost Efficiency: By reducing the number of products offered, retailers can lower operational costs such as inventory management, storage, and waste. These savings can then be passed on to customers in the form of lower prices.
- Simplified Shopping Experience: Customers benefit from a simplified shopping experience where decision-making is easier due to fewer choices. This is particularly appealing to those who prefer a quick shopping trip for everyday items.
- Quality Over Quantity: Limited assortment stores often focus on maintaining high-quality standards for the products they do stock. In many cases, these retailers offer private label brands that compete with national brands in terms of quality but are more affordable.
- High Volume Sales of Fewer Products: With fewer products to manage, these retailers can buy in larger volumes, securing better deals from suppliers, which supports low pricing strategies.
Limited Assortment: Implications for Retailers and Consumers
- For Retailers: Adopting a limited assortment model can lead to lower operational complexities and higher inventory turnover. It requires careful selection of products and a deep understanding of consumer preferences to ensure that the limited choices available still meet customer needs.
- For Consumers: This model offers the advantage of lower prices and easier decision-making but might not suit those who prefer a wide range of products or specific niche items.
Limited Assortment: Examples in the Market
- Aldi and Lidl: These are prime examples of limited assortment retailers. They have successfully implemented this model by offering a selection of products that covers 90% of the most commonly purchased grocery items.
- Dollar Stores: These often employ a limited assortment strategy, focusing on low-cost items across a variety of categories but with limited brand or product choices.
This retail strategy aligns well with trends towards minimalism and efficiency in shopping habits, especially in urban areas where consumers may prioritize convenience and pricing over variety.
