Assortment planning in retail is when a store optimizes visual merchandising, store layout, and product placement for the most conversions. It ensures that all your channels are aligned, so no matter how your customers shop, you have what they are looking for, with customized assortments based on attributes and location clustering. We chatted with our VP of Merchandising Solutions, Iain Nicol, as to why Assortment planning is so critical for retailers.
Why is assortment planning so important?
The current trend towards online shopping means that, when shoppers visit a physical store, they expect to be able to find the product they want, in the size they want. Otherwise, they’ll most likely walk out of the store and hit the internet, where ‘endless aisles’ and comprehensive ranges of products are readily available.
It’s unfortunately very expensive for retailers to stock every size of every colorway of every product in stores – stores of different sizes, stores in different climates, stores with different demographics all influence what can and should be held in stock. Often, when certain sizes don’t do well in certain types of store, there’s a markdown or clearance cost, and when items do well in other stores, there’s a risk of stockouts meaning lost sales. Good Assortment Planning should reduce both of those issues.
In addition, the assortment defines the identity of the brand. Good product choice and intelligent placement to stores can make or break the shopping experience.
What should retailers keep in mind when assortment planning?
- Use the overall Merchandise Financial Plan to define the breadth of the assortment (how many products are needed to meet the plan)
- Not all stores are the same – Use historic data aligned with AI/Machine Learning to group stores to make assortment management easier
- Use historic sales information and trend forecasting to understand what will and will not sell in a specific type of store, and set your assortment accordingly
- Assortments should be reviewed regularly against plan and actuals
What’s your No. 1 tip for assortment planning success?
Assortment Planning is part of a much wider process – Merchandise Financial Planning, Location Planning and Clustering should provide the foundation, and the Ordering, Allocation, and Replenishment processes should flow seamlessly from Assortment Planning.
No. 1 tip? Integrate the process and you’ll get it right.
Any other thoughts or advice on the subject?
If you’re going from excel to a proper system, keep it simple. It’s tempting to go for a solution that adds so much complexity that the users can’t (or won’t) adopt it. Embrace the benefits of a ‘joined up’, consistent solution, and don’t be afraid to adapt your business process to capitalise on the benefits a system can bring.
Our Retail Dynamics Assortment module can help you streamline your merchandise planning process with best practices. This will allow you to meet your financial targets while offering what your customers want, when they want it, and how they want it. Feel free to fill out the form below and contact us if you’d like more information on our Assortment module.