Assortment Planning

Assortment planning is both extremely important and challenge for retailers. The term Assortment can be defined as the combination of all products made available in a store and a set of products offered within a product category. These products form a set because they share similar physical characteristics.

Assortment Planning involves determining the quantities of each product that will be purchased to fit into the overall merchandise plan. Details of color, size, brand, materials, etc. have to be specified. The main purpose of creating an assortment plan is to create a balanced assortment of merchandise for the customer.

Various factors affect the assortment planning process. The first among these factors is the type of merchandise that is to be shocked in the retail store. Merchandise may be classified as basic or staple merchandise, fashion, convenience or specialty goods.

Buying staple merchandise is relatively easier as it can be easily done by analyzing past sales records. Seasonal staples are those products which are in demand only at a particular time of the year, every year. For example, decorative diyas sold during the Diwali season in India, or decorative ornaments of the Christmas tree before Christmas or umbrellas and rain coats / rainy shoes in the rainy seasons.

The retailer’s policies with respect to the type of brands stocked and the level of exclusively to be maintained in the store also affect the merchandise buying decisions. Thus, after arriving at the amount of money available to invest in inventory, a merchandiser would have to determine the variety of merchandise.

Let us take the example of a merchandiser who is working towards the assortment plan for the men wear department for a large retail store. He would start by determining the product line which is under consideration. A product line is a broad category of products having similar characteristics and uses. Thus, in menswear, product lines could be shirts, trousers, accessories, shoes etc. He would then have to determine the breadth and depth to be offered under the said product line. The breadth refers to the number of brands carried within each product classification. The depth, on the other hand, refers to the number of choices offered to the customers within ach band or product classification.

Assortment size actually reflects two related aspects namely the number of stock keeping units (SKUs) and shelf space. While a merchandiser always works towards creating an optimal; merchandise mix, various factors would affect his /her decision. These would be the amount of money actually available for buying the targets set by the management for merchandise turnover , the space actually available within the stores for stocking the merchandise and the market constraints. Working under these constraints, a buyer works towards creating an optimal merchandise plan. A typical format which may be used by a merchandiser or merchandise Assortment Plan is illustrated in Table below:

Table Merchandise Assortment plan:

Season ————– Class:—————————–

Department ———— Sub Class : ———————

Vendor | Style # | Units| Cost Retail Price | Planned Purchases| Total

After preparing the assortment plan, the merchandiser progresses to preparing a range plan.

Merchandise Hierarchy for typically Apparel Retailer

Menswear <>

Product Line>>

Shirts >> Trousers >> Accessories >>

Shirts>> Zodiac > Van Heusen > Louis Phillippe >> Arrow <>

Styles >> Colors >> Size << Depth

The range plan:

The aim of range plan is to create a balanced range for each category of products that her retailer chooses to offer. The process of range planning ensures that the goals of the merchandise plan fall into specific lines, and many a times, the SKUs. Good range planning should essentially take care of the following:

1) The number of items/ options available to the customers should be sufficient at all times and should be such that it helps the customer make a choice.
2) The range planning process should ensure that overbuying and under buying is limited.
3) Sufficient quantities of the product should be available, so that all that stores can be serviced and the product should be available at all stores across various locations.

A good range plan ensures that the customer is happy with the range that is available to him.

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  • Murugan

    Good article

  • Davinc-retail

    Good software tools are available that far outperform excel

  • Abhishek Kadu

    Nice article