As shoppers, we typically think that the more color choice we have when purchasing products, the better. We like having the option of a blue, green, red, or yellow sweater versus just black, white or cream. Choices give us control, an opportunity to be creative, and possibly a greater emotional connection to the products we view and buy. However, from a retailer’s perspective, is offering the whole rainbow of colors beneficial? Does offering 10 colors versus three really provide customers with additional value, encouraging them to buy more? That’s what Stitch wanted to explore.
Our Stitch data team recently conducted a study that showcases the power of color choice for retailers and how much it can impact the bottom line. Take a look at the details below and let us know how you think color affects your business!
What we questioned:
To uncover the impact of color choice when selling products, our data team analyzed the sales of products sold that had color (or colour) as a product option over the course of one year. Although the types of products vary, most of them were apparel or accessories.
We wanted to answer the question: “Does product color mix impact revenue for retailers? If so, what are the patterns and how can we mine our data to help retailers make smarter purchasing decisions?”
We hypothesized that getting color mix wrong can directly affect a business’ revenue. For example, we thought that offering too many colors might spread per color sales thin and make purchasing items difficult because suppliers require a certain minimum of a particular SKU. For example, say you have to buy 500 shirts of a certain color as a minimum from your supplier. If you offer too many colors, is it smart to stock that many units of items that potentially won’t sell? But on the other hand, does offering too few colors turn customers away, decreasing sales?
How we analyzed the data:
Our data team grouped the results of our study into two categories:
- Chromatics: a color that has a hue, colors of the rainbow
- Achromatics: a color that has no hue or has a natural hue
We compared how these color categories behaved in terms of sales dollars and portion of unit sales. Then, we compared how individual colors fared.
What we found:
Average revenue per unit is greater for achromatic colors.
- The average revenue per unit for an achromatic is 15% higher than for a chromatic.
- Achromatics on average sell for $30 per unit, while chromatics on average sell for only $26 per unit.
- The range of average revenue per unit for chromatics is from $20 (pink) to $35 (navy).
- The range of average revenue per unit for achromatics is from $28 (white) to $35 (brown).
- Only two chromatics (orange and navy) have average revenues per unit equal to or greater than the lowest average revenue per unit of the achromatic group.
- Pink, purple and yellow have the lowest average revenue per unit of all colors analyzed.
- For the chromatics, two of the three colors that had the highest average revenue per unit are shades of blue (navy at $35 and blue at $27).
Achromatics make up nearly two-thirds of all units sold.
- 63% of all units sold are achromatic, while only 37% of units sold are chromatic.
- The majority of items sold is from sales of black items, which make up 34% of all unit sales.
- Black is critical to any product mix; it is 2.4 times more popular than the next most popular color, white.
- Yellow is one of the least popular colors and commands one of the lowest average revenue per unit amounts.
Things retailers should explore:
As always, it’s important to tailor purchasing decisions to best fit your business. This data is intended to show you the important role color plays in retail, however in order to maximize sales and create a high inventory turn-rate, you must analyze your own data to uncover your best options.
Questions to ask:
- How many different colors of one item should I offer?
- Historically, what are my best selling colors?
- Do different products have varied color popularity?
- What do my customers want? Should I ask them what colors they’d like to buy?
- What color do I see most often sitting on my shelves and can’t get rid of?