The third level in a merchandise hierarchy, representing a group of related categories or subcategories within a department (e.g., Blouses, T-shirts, Sweaters).
What is a Class?
A class is a specific group of products within a broader merchandise category. It helps retailers organise and analyze products based on their common attributes or functionality. Classes assist in assortment planning, sales analysis, and merchandising decisions. They enable retailers to determine the right mix of products, track sales performance, and make informed decisions about sourcing, pricing, promotions, and inventory management.
How a Class works
- Classification: A class helps categorise products based on shared characteristics such as product type, function, or customer segment. It provides a way to organise and manage a wide range of products within a category.
- Assortment Planning: Class information is used to create targeted assortments for specific customer needs. By understanding the unique attributes and preferences of each class, retailers can curate product offerings that cater to different customer segments and maximise sales potential.
- Performance Analysis: Tracking the performance of each class is crucial for retail success. Retailers analyse sales data, inventory turnover, and profitability metrics at the class level to identify top-performing classes and areas for improvement. This analysis helps inform decisions related to pricing, promotions, markdowns, and inventory management strategies.
By leveraging class-level insights, retailers can optimise their product offerings, enhance customer satisfaction, and drive profitability.
Pros of a Class
- Enhanced Product Organisation: Class provides a systematic way to categorise and organise products within a merchandise category. It helps retailers manage large product assortments more effectively, making it easier to locate and track specific products.
- Targeted Assortment Planning: Class information allows retailers to tailor their product assortments to specific customer segments or preferences. By understanding the unique characteristics of each class, retailers can curate offerings that align with customer needs, increasing the likelihood of sales and customer satisfaction.
- Performance Analysis and Optimisation: Analysing the performance of each class provides valuable insights into sales, inventory turnover, and profitability. This data helps retailers identify top-performing classes and allocate resources more effectively. By focusing on high-performing classes and addressing underperforming ones, retailers can optimise their product mix, improve sales performance, and maximise profitability.
Cons of a Class
- Subjectivity in Class Definition: Defining classes is a subjective process and can vary between retailers. This can lead to inconsistencies and challenges in comparing data across different retailers or even within the same retailer. It requires careful consideration and agreement on the criteria used to classify products.
- Potential Complexity: Managing a large number of classes can introduce complexity to the retail planning process. It requires dedicated resources and systems to effectively maintain and update class information. Additionally, a high number of classes may lead to increased complexity in analyzing and interpreting data.
- Limited Flexibility: Once products are assigned to specific classes, it may be challenging to make changes or reclassify items. This lack of flexibility can become an issue when market trends or customer preferences change, requiring retailers to adapt their assortments. It may require significant effort and resources to modify existing class structures.
Below you will find answers to common questions
How do you determine the class of a product?
The class of a product is typically determined based on its attributes, characteristics, or intended use. Retailers often establish specific criteria or guidelines to classify products into different classes. This can include factors such as product category, brand, price range, target market, or functionality. By considering these criteria, retailers can assign products to appropriate classes for effective planning and analysis.
What is the purpose of using classes in retail planning?
Classes play a crucial role in retail planning as they allow for better organisation, analysis, and management of products. By grouping similar products into classes, retailers can gain insights into sales performance, inventory management, and assortment planning at a more granular level. Classes enable retailers to identify trends, make informed decisions, and allocate resources effectively. It also facilitates comparisons between products within the same class and enables retailers to tailor strategies based on class-specific characteristics or customer preferences.