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A Beginner’s Guide to Scrambled Merchandising

Darren Gilbert
by Darren Gilbert on Dec 3, 2018 4:29:40 PM

Scrambled Merchandising

Catering to the product needs of your customers means you need to be mindful of what you stock. That much should be obvious. After all, choose the wrong assortment, and you could find yourself with products you can’t sell. Of course, that doesn’t mean you shouldn’t contemplate diversifying and investing in a scrambled merchandising strategy. If you do, you simply need to be deliberate.

By that, we mean you need to know why you’re investing in such a strategy. Because if you’re not sure, you’ll find yourself attempting to please anyone who enters your store. And that is, quite simply, not possible.

What is scrambled merchandising

What is scrambled merchandising?

Also known as a scrambled assortment, scrambled merchandising is an assortment planning strategy used by retailers who are interested in stocking a variety of items that are not related to their product lines or original business identity.

Think of a supermarket known primarily for carrying Fruits and Vegetables that begins to stock Pet Grooming and Gardening products. Or, a pharmacy deciding to include an Electronics department.

As for the ‘why consider a scrambled assortment?’ that much should be obvious: it aims to serve as many customers as possible by offering them a variety of products across multiple categories. That means that you’re likely to find many referring to the retailers who follow this strategy as one-stop shops.

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That is, at least, what these retailers are attempting to achieve. They are interested in providing customers with the opportunity to get all they need by visiting their store. The result is that such retailers become popular with shoppers.

Of course, you should expect that since this is convenience shopping at its best.

It also explains why scrambled merchandising has become an attractive strategy. While supermarkets are well known for implementing it and doing so successfully, there are plenty of other retailers from pharmacies to independent and speciality stores getting in on this.

But, that doesn’t necessarily mean that all retailers should follow it. We’ll touch on why we say that later on in this piece. For you, it’s worth returning to the reason why you’re considering it. Also, just because your competitors have implemented this strategy doesn’t mean you should follow suit.

                                                                  Scrambled Merchandising AdvantagesScrambled Merchandising Disadvantages

Why should you invest in a scrambled merchandising strategy?

As much as scrambled merchandising might appear enticing, it is a strategy. And like any retail strategy, it has various benefits and corresponding risks to consider. If you want to follow this approach, and see success, you need to review each and weight them up against each other.

Advantages

1. You can increase your overall sales

The first benefit of following such a strategy is that it can help you to increase your sales across your entire store. That much should be obvious given that you’re stocking a wider variety of product categories.

But there is more to it. You’re going beyond your initial target audience, opening yourself up to new markets; appealing to shoppers that you might not have had access to in the past.

There is also the point that while these new shoppers are in your store to pick up that product, there is every possibility that they’ll buy another product too. In fact, you’d expect them to.

Those who argue for this strategy will agree that following it will encourage impulse purchases.

2. You can spread the risk of carrying poor-selling products or categories

Another advantage of stocking a broader assortment is that you’re able to spread the risk of carrying more products and categories.

For example, Product A isn’t performing as well as you had hoped. Or it had performed when first listed but now it’s failing to provide you with a decent return. The whole category might even be failing. Meanwhile, another line or category is performing above average.

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In the past, you might have only listed the category with Product A (and others) in it. By following this strategy - essentially spreading your risk - you can lower any dangers of stocking a category or product that causes you more harm than good.

What’s more, so long as you can cover your costs elsewhere, you can continue to stock it, albeit in a smaller quantity.

3. You can portray yourself as a one-stop shop

As already mentioned in this piece, following a scrambled merchandising strategy allows you to portray yourself as a one-stop shop.

Let’s say, for example, that you’re a pharmacy. By using this strategy, you could look to branch out and stock various other categories such as Flowers, Toys and even food if you want to pull more customers into your store.

Of course, you’d need to plan carefully around how deep your product assortment would be for each of your new categories. That includes sticking to the category strategies you’ve chosen for them. The last thing you’d want is to stock too much product of a new category when you’ve rolled out a transaction building strategy for it.

Disadvantages

1. Leads to intertype competition

While a scrambled assortment can offer you the opportunity to meet the product needs of customers that you might not have shopped at your store before, it does pose a challenge: it leads to and increases intertype competition.

In short, intertype competition is when retailers with different target markets become direct competitors because they both stock the same product. For example, if you’re a pharmacy and you consider stocking a food or Pet Toys category, you could find yourself competing with a supermarket nearby who has a bigger budget and therefore an advantage over you.

2. Lack of expertise in understanding the purchasing and selling of items

Because you have never stocked a particular product or category before, there is every possibility that you’ll be inexperienced in the processes around it. That includes understanding the ins and outs of purchasing the item and selling it in-store.

What could end up happening is you order too much of a specific product, or you end up ordering a new line that your customers didn’t want in the first place. That’s not to say that you shouldn’t bring in new lines.

If you do want to bring in a new line, you need to do your homework. Look at your retail data and market trends and then make an informed decision.

3. It can confuse and frustrate your customers

While you’ll find more and more stores offering a wider variety of products to provide customers with more options, that doesn’t mean that it’s a good thing.

In truth, there is a real danger with this approach towards product management. It can come across as haphazard and disorganised. What’s more, if you attempt this strategy without much forethought, you could lose your brand identity. As soon as lose sight of who you are or what you offer your customers, it’ll show. And shoppers will be unsure of what to expect when they visit your store.

For example, if you’re a pharmacy, your primary product assortment should be around medicines and the like rather than a deep assortment of Pets and Grooming products.

                                Scrambled Merchandising One-Stop ShopScrambled Merchandising Good Business SenseScrambled Merchandising Cost

When should you invest in a scrambled merchandising strategy?

Having considered the above advantages and disadvantages, you may be thinking that it's worth investing in this strategy.

Before you take the first step, though, it’s worth contemplate a few factors, if only to give you pause. These factors can take the form of questions. By answering them honestly, you’ll have a better understanding of if this is a strategy worth pursuing.

1. Do your customers view you as a one-stop shop?

As much as you might want to portray yourself as a one-stop shop, it’s your customers who will ultimately decide that.

Of course, you can help to create this image by implementing various strategies and stocking multiple categories that will make the shopping experience pleasant. More than that, you strengthen your reputation as such by delivering consistently.

That said, you need to honestly ask yourself if there is potential for your store to become a one-stop shop? If yes, then this could be an approach worth taking. If no, then it’s best to consider other options.

2. Does it make good business sense to invest in this strategy?

If you want to invest in a scrambled assortment strategy, consider this: does it make good business sense? In other words, would it positively or negatively affect your image?

It’s worth referring back to the possibility of confusing your customers by following through with such a strategy. As much as a broad product variety might help you to break into new markets, you can go too far and offer so much that you lose sight of the purpose of your retail business.

You’d be better off concentrating on your core assortment and then added a category here or there that will provide you with opportunities to make more sales.

3. Do you have enough capital to invest in this strategy?

Last but certainly not least, do you have enough capital to invest in such a policy. Considering the costs associated with carrying a diverse merchandise mix, you need the proper resources to be able to pull this off.

There is also the point that you have to have tight control over your inventory, and you will face extra challenges around your stock turnover and costs. Are you adequately prepared to deal with these and other financial situations without negatively affecting the rest of your business?

Conclusion

If you want to get serious about offering the right product assortment to your target market, it’s time to consider investing in specialised assortment planning software. Besides helping you to select the right products, it will help you to place them correctly on the shelf to drive increased profitability. Visit our online store here for more information or click below for a free demo.

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