Every company has strong, weak and in-between product lines or services. Differentiation demands the manager of such business to know which is which and how to invest accordingly. I encountered this topic in Jack Welch's Winning and it has since stuck. In the book, Welch describes how differentiation is a way of separating excellent, competent, and incompetent workers of a company into appropriate categories. He also talks about analyzing one's products and separating the strong from the weak and investing in the strong ones which pay the business more in the long run.
This principle can as well be applied in retail. With reference to it, we can say that every retail store has three types of products: the fast-selling, the normal-selling, and the slow-selling or almost-ignored products. The fast-selling products are the ones that quickly sellout. For various reasons, people go for those products once they are available without really looking at others in the same category. They are products with a loyal customer base. Normal-selling products are usually people's second choice products that they patronize because they can't find their first choice. Among these normal-selling products, there are still those that sell fast, sell at normal rate and those who usually go last. Finally, there are the slow-selling or almost ignored-products. These are the ones that people consider last. Not because they aren't valuable or good products, but probably because they haven't been able to capture people as much as they should.
Taking decisions based on this principle of differentiation requires the store owner to pay most attention to the fast-selling products. They are the ones that draw the most purchases. Use them to your advantage and make sure they constitute the majority of your shelf space. For the normal-selling products, keep them also. There's the need for variety. But do away with the slow-selling products. The question there is, how do you know which products belong to which category?
Well, technology is there to make life and business simpler. PrognoStore offers you that great ability to monitor your inventory and track sales. This way, you'll be well equipped to know how to apply differentiation in your store and effectively increase sales and income. Also, your products will sell out faster.
Have you found this insightful? What other ways do you think differentiation can be applied in retail? Also, subscribe to the PrognoStore emailing list and we'll definitely let you know when we're live!