Retail Strategy 101: Product Breadth, Depth, and Assortment
Understanding Basic Industry Terms
In the retail industry, product breadth refers to the scope and variety of products that a store offers. A good selection of merchandise is key to attracting and keeping customers, no matter what type of products you sell. But offering too many different products in too many categories can be confusing and cause shoppers to freeze up from too many options.
Creating a balanced merchandise mix will be critical to your store's success, but achieving that requires an understanding of a few retail inventory basics. These are the fundamentals of retail inventory strategy, and knowing how to work with them is critical for any retailer.
In its most basic definition, product breadth is the variety of product lines that a store offers. It is also known as product assortment width, merchandise breadth, and product line width.
For instance, a store may only stock four items of each SKU, but its product breadth (variety) may consist of 3,000 different types of products. A big-box retailer like Walmart or Target often has a large product breadth, as their customers come looking for a wide variety of products when they shop.
The other part of the retail inventory equation is product depth (also known as product assortment or merchandise depth). This is the number of each item or particular styles that you carry of a particular product.
A store may intentionally have a shallow product depth to keep inventory costs down. This means they might only stock 3 to 6 SKUs of each product in the store. A good example of a store with good breadth but less depth is a club store such as Costco, which sells almost everything under the sun, but only one or two options for each type of product. Customers coming to Costco are looking for the best value, not the most options.
Breadth + Depth = Product Assortment
Product breadth is the number of product lines, while product depth is the variety within each of those lines. These two elements combine to make up the store's product assortment or merchandise mix.
Specialty retailers will likely have a smaller product breadth than a general merchandise store. This is because their products have a narrower focus and a specific niche. However, they may have an equal, if not greater, product depth if they choose to stock a greater variety of each product line.
A candle store, for example, will have a smaller variety (or breadth) of products than a corner drug store, even if it has the same number of products in inventory:
The candle store stocks only 20 varieties of candles (breadth), but it may stock 30 colors and scents (depth) of each of those candles.
The corner drug store stocks 200 different products (breadth) but may stock only three variations, brands, or styles (the depth) of each product.
Both stores have 600 products in inventory, but the total assortment looks very different.
These two stores have entirely different strategies for their product assortment because of the needs of their customers. Fragrance and color are more important to the candle store customer than having 100 candle styles to choose from. On the other hand, convenience is essential to the drug store customer, and they may want to pick up toothpaste and batteries in one stop. The drug store needs to stock all of the essentials, even if there is only one option for each.
Seasonal Merchandise Mix
A store's merchandise mix may also change with the seasons. The holiday shopping season, for instance, is a time when many retailers choose to add a greater variety. This gives customers more gift-giving options, and it can allow the store to experiment with new product lines without making a big investment in inventory.
The Bottom Line
The way a store adjusts its product depth and breadth is its assortment strategy. The right strategy for one retailer may not be the right one for another, as what works will depend not only on your customers, but on your brand identity and on finding the right mix of profitability for each of the items in your inventory. Learning to perfectly balance product mix is an essential skill for any retailer to develop.