Assortment Planning

What is Assortment Planning?

Assortment planning is the process by which brands and retailers systematically evaluate data to make informed decisions about the selection of products and variations to be sold in upcoming seasons, and align assortment strategies with financial plans. Assortment planners decide products to introduce in specific markets, channels, or locations, and at what times, aiming to sales, and brand consistency.

Through meticulous assortment planning, retailers can guarantee the availability of desired products, effectively meet customer preferences and drive revenue growth. The stakes are high in assortment planning, as everyone from the C-suite to operations, fulfillment and supply chain – all the way through to the planners, merchandisers and buyers – knows well.

What does Assortment Planning Include?

<span class="mil-accent">01.</span>Finding the right balance between seasonal, carryover and permanent products.
01.Finding the right balance between seasonal, carryover and permanent products.
<span class="mil-accent">04.</span>Assigning items to relevant clusters to build customer-centric assortments.
04.Assigning items to relevant clusters to build customer-centric assortments.
<span class="mil-accent">02.</span>Initiating the placeholder and new item creation process in conjunction with PLM.
02.Initiating the placeholder and new item creation process in conjunction with PLM.
<span class="mil-accent">05.</span>Visualizing the merchandising plan to present products in the most appealing way.
05.Visualizing the merchandising plan to present products in the most appealing way.
<span class="mil-accent">03.</span>Defining the optimal size distribution to mach customers’ expectations.
03.Defining the optimal size distribution to mach customers’ expectations.
<span class="mil-accent">06.</span>Calculating the right amount of merchandise to meet customer demand and hit financial targets.
06.Calculating the right amount of merchandise to meet customer demand and hit financial targets.
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Assortment Planning goes Through Several Key Stages:

 

Segmentation
Segmentation
Assortment planners analyze customer attributes and preferences by identifying consumer personas and the channels they use for purchases. This helps gain insights into diverse customer needs and product preferences.
Localization
Localization
Merchandisers group profit centers based on similar trends into store clusters, assigning products accordingly. Seasonality and local events are considered for timely product introductions, with a focus on past performance data for effective planning.
Store Planning
Store Planning
Assortment plans determine product distribution, allowing retailers to visualize how products will be displayed in each store. Analyzing customer buying patterns and insights enhances the creation of store-specific assortments, improving the overall customer experience.
Financial Alignment
Financial Alignment
The final stage ensures that the assortment plan aligns with the retailer’s financial goals from top down and bottom up. Once strategically selected and finalized, the assortment plan supports the creation of purchase order that maximize profitability, sales, and inventory investment.

Why is Assortment Planning Needed?

By understanding the needs and desires of customers, retailers can construct a product assortment that resonates with them and drives sales.Customer demand is highly volatile, shifting rapidly in response to changes in the economy, fashion trends and other external factors. Inaccurate information on customer demand impacts the entire fiscal year. The wrong assortment decisions can lead to:

 

mediocre sales,

excess inventory,

slumping margins,

risk of stockouts or overstocking,

 

As well as the financial impacts, retail assortment misplanning can lead to poor customer experience, low satisfaction and even irreparable damage to a brand’s reputation and trust.

 

Having access to the right information is not enough. That information needs to be actionable. Live, actionable data enables planners and buyers to make better, more calculated decisions – from initial planning during pre-season, through to in-season allocation – and avoid costly overstocks, aggressive discounting and missed sell-through.

 

A detailed assortment plan built upon accurate data helps retailers to manage increasing omnichannel complexity, enable SKU rationalization and gain greater insight into the most profitable channels to market to optimize the wider merchandise plan. Retailers can also better understand how to balance evergreen products, otherwise known as NOS (Never Out of Stock), and their seasonal offering by reviewing and optimizing the assortment plan year on year. A thoughtful and well-researched assortment plan will substantially impact a retailer’s bottom line. Ensuring your replenishment strategy is also aligned with the assortment strategy, will ensure less in-season adjustments and reduce further complexity.