The Do's and Don't's of Assortment Planning

Brands and retailers have an arduous task when it comes to planning their future seasons. They must know what inventory to stock up on, which pieces may be unnecessary to continue manufacturing, and what new trends customers will be keeping their eyes out for. Brands and retailers risk stockouts, markdowns, and dissatisfied customers if planning goes to the wayside. That’s why having a good assortment planning method is vital for the further success of brands and retailers. 

What is Assortment Planning?

Assortment planning is the way brands and retailers decide what items and variations they want to carry and sell for a season. Businesses must think about the breadth of the assortment, meaning the number of item types and categories. They also must consider the depth, meaning the number of variations for each type of product and category. If a brand or retailer provides general products in different categories (like Target), then breadth is more important. But, if a retailer or brand specializes in one type of product (like Payless), then depth is more significant.

How does Assortment Planning differ Based on business model?

Depending on a brand or retailer’s mission for a season, the steps behind assortment planning will look different. Some organizations will consider their overall financial strategy, such as margins and sales goals, while others will consider how their brick-and-mortar stores’ physical layouts factor into their decision-making–are there space constraints or warehouse capacity? Other organizations will think about assortment planning first, deciding product assortment even before creating a financial plan, and tailoring their budget accordingly. A retailer or brand needs to recognize their priorities and then they can decide when to incorporate assortment planning into their overall business strategy.

What issues do retailers run into regarding their assortment planning?

Most retailers and brands run into a number of different variables when it comes to assortment planning. These obstacles vary from existing contracts, point of sale budget, vendor relationships, shelf space, and distribution center capacity. When it comes to these potential problems, retailers and brands utilize a medley of tools, from Excel spreadsheets to more automated processes. Centralized data management, such as ERPs, can be useful, but may still require manual processing and calculations for exception items. Companies can also purchase AI-backed software built specifically for assortment planning.

What questions do retailers need to ask when they begin planning?

Meeting sales goals is usually a company’s main objective each season. But there are other factors to consider in order to make a sound, well forecasted plan. These factors include: how to plan assortment by geography or demographic, the best way to modify assortment based on store size, which products to add to this season’s collection, and which lines to diminish or fold altogether. Knowing the answers to these questions can help retailers and brands avoid creating a strategy that fundamentally does not align with their needs; an organization does not want to enter next season without a clear idea of how to begin planning. 

How can retailers optimize assortment planning?

So how can retailers optimize their assortment planning strategy for a fruitful season? We’ve addressed the best ways to execute a fantastic sales cycle: 

Utilize Data

Data from past seasons can be crucial to determining what brands and retailers need to optimize for an upcoming season. A state-of-the-art inventory management system can help retailers and brands forecast stock issues and give insight into what SKUs are doing well and which could potentially be removed. If a company does not have access to this kind of data forecasting, they can also simply analyze past sales to interpret if there are overlapping characteristics regarding best-selling products, such as who shopped for them and how those items were promoted.

Utilize Clusters

If a brand or retailer sells on multiple channels or stores, they should cluster their assortment planning by shared traits. These characteristics could include demographic, location, and size.. By clustering planning under different umbrellas, brands and retailers can streamline and organize their assortment process. 

Consider Cross-Selling

Cross-merchandising is a known way for brands and retailers to increase their bottom lines. Companies should think about how different items in their product assortment could be compatible. Cross-selling can also be an easy way to sell smaller, inexpensive items alongside higher-value products, steadily increasing a brand or retailer’s profits. 

Utilize Visual Merchandising

To stay competitive, retailers and brands need to align marketing, sales, and website design for an optimal product assortment. Visual merchandising in e-commerce can make or break a sale just by the nature of how easy a shopper’s buying experience is. Brands and retailers need to ensure that their e-commerce site is user-friendly and showcases as relevant and attractive buying options as possible for each visitor. I know that I’ve stayed on a website due to a clear visual representation of the products avnd a seamless buying journey. 

Consider Pricing 

Even the best assortment planning can run into problems when a company’s pricing strategy does not align with competitors.’ Poor market research and lack of pricing knowledge can lead to overstock of products and an erosion of bottomline. Brands and retailers need to keep their eyes peeled for competitors’ price points and stay up to date on market trends to ensure that all prices are satisfactory to their target consumer. 

Assortment planning is vital to every retailer or brand’s season. That’s why it’s important for businesses to optimize their product and selling strategies with an organized, seamless, and potentially technologically savvy assortment plan. Head into Q1 with peace of mind about how and what to sell!