Broken links should be redirected to a similar page.
For example, if the broken link used to direct customers to a product page for a 'Navy Blue Throw Blanket', then the best option would be to redirect customers to a new product page that also sells navy blue throw blankets.
If there are no similar products, then redirecting the customers to the relevant collection can be a good option. For example, if the shop no longer sells any similar blue blankets then they can redirect customers to the 'Throw Blankets' collection.
When there is no relevant product, collection, or other type of page to redirect to then you can redirect customers to the homepage. You should only do this if there are no better options. If all or most broken links are redirected to the homepage this can have a negative impact on your SEO.