Assortment planning process

Assortment planning is essential for aligning a retailer's product selection with customer demand, optimizing inventory, and enhancing sales. Here’s a breakdown of the main steps in the assortment planning process.

1. Sales Forecasting

• Purpose: Predict the demand for a product category, ensuring the assortment meets expected sales.
• How: Use past sales data, trend analysis, and market research to estimate customer demand.
• Example: If sales for a specific style of jeans have consistently risen in recent years, forecasted sales may indicate higher inventory needs for that category.

2. Define Variety and Assortment Depth

• Variety (Breadth): The number of product types or categories offered.
• Depth: The number of SKUs (Stock Keeping Units) within each product type.
• Goal: Balance variety and depth to satisfy customer preferences while managing inventory costs.
• Example: A retailer might offer a broad variety of electronics but focus deeply on high-demand items like smartphones.

3. Editing the Assortment

• Purpose: Refine the assortment to match the retailer’s strategy, space, and customer preferences.
• Considerations:
  • Retail Strategy: Align product mix with brand identity.
  • GMROI Impact: Ensure high return on inventory investments.
  • Complementary Products: Include items that boost sales in other categories.
  • Store Layout: Consider how much space is available for each category.

4. Model Stock Plan

• Purpose: Define the ideal number of units for each SKU in each store.
• Goal: Minimize out-of-stock issues while avoiding overstock.
• Example: A store might stock a basic number of jeans in various sizes but increase quantities for more popular sizes based on historical sales.

5. Setting Inventory Levels and Product Availability

• Backup Stock: Extra stock kept to ensure availability and avoid stockouts.
• Product Availability: The percentage of demand met without running out of stock.
• Goal: Optimize availability levels to balance customer satisfaction with cost efficiency

The assortment planning process helps retailers achieve a profitable, customer-centric product mix. Through careful forecasting, SKU selection, and inventory management, retailers can meet customer needs while optimizing costs and improving sales performance.