Despite the irrefutable importance of assortment planning, many retailers still struggle to get it right. Why? Because there’s no surefire method or exact science for predicting the future, which is ultimately what assortment planning aims to do.
What is Assortment Planning?
Assortment planning is about identifying the products that consumers will most likely want to buy, estimating the right amount of stock, and matching market demand as closely as possible. It’s a prediction, and – while predictions can get pretty close to reflecting reality – they’re never spot-on.
The trick is to leverage accurate enough data and prediction models to plan an assortment with the greatest chance of profitability and consumer satisfaction.
Retailers define the range of products they plan to sell in a given assortment according to width and depth. Width denotes the number of different product categories that retailers plan to offer, while depth describes the number of products and brands retailers plan to sell within a specific category.
A shoe store like DSW will offer a deep assortment, meaning few product categories (in DSW’s case, mostly just shoes), but many products and brands. A wide and shallow assortment entails a lot of product categories, but few products and brands per category. Large retailers like Walmart are known to plan wide and shallow assortments.
Regardless of the type of assortment a retailer plans, there are several challenges they’ll face ahead of each season. In addition to predicting current and future consumer trends, general merchandise and apparel retailers also need to consider current micro-market dynamics, differing consumer behaviors, and the limitations of specific brick-and-mortar locations.
One kind of product assortment may be appropriate for a small store in a bustling city, while another may be better suited for a large outlet in a suburban strip mall.
Given the challenges inherent to assortment planning, general merchandise and apparel retailers need systems and processes in place that support agile response to real-time market data inputs on assortment strategy.
Leveraging Data and Process Transparency to Better Balance Your Assortment
A balanced product assortment is one that equally prioritizes innovation and anticipated consumer demand. While it’s important to follow consumer trends, retailers that go a step further and set new trends through unique product innovation have the opportunity to truly differentiate themselves from competitors.
Creating a balanced product assortment primarily hinges on uniting teams, processes, partners and data streams across planning, innovation, development, and supply chain activities.
Product innovation, development, sourcing, and supply chain activities are intricately connected, and each process informs the next. Integrating assortment planning visibility into each these processes ensures all teams are equipped to make data-driven decisions that position retailers to maximize profitability, reduce costs, and ensure supply chain responsiveness.
Hindsighting is the first key step that lays the foundation for a balanced product assortment. Retailers must equip sourcing teams with accurate, real-time sales data and sales performance KPIs to make the best-possible decisions about which products – and how much of each – should be included in a given assortment.
Accurate hindsighting enables buyers to use sales performance analyses to drive future product innovation, development, and sourcing decisions. This data also helps retailers accurately gauge demand in combination with insights about current market trends.
Optimally, hindsighting should include insights about top and bottom sellers, return rates, competing styles, sell-through, and replenishment issues. This data should also be supplemented by reasoning that explains any missed sales opportunities, such as quality issues.
Leveraging an end-to-end solution that incorporates hindsighting and sales data into innovation, development, production, and logistics decisions enables retailers to increase sell-through, optimize inventory, and ultimately satisfy fast-changing consumer expectations.
By integrating early retail planning inputs as well as real-time data and insights that evolve that planning strategy into downstream processes and partner directives, retailers can ensure that all members of their business community have the information they need to produce the right amount of inventory to keep stores and online sell channels sufficiently stocked and replenished.
How Assortment Planning Connects to Downstream Processes and Operations
During times of significant supply chain disruption, balanced assortment planning is particularly important for retailers struggling to source enough product on time to meet consumer demand.
Giving sourcing and manufacturing partners access to retailer requirements as early as possible enables these partners to adjust their production schedules and secure the materials and labor needed to meet demand. This integrated planning approach enables manufacturers to stay abreast of retailers’ needs and expectations amidst unstable market conditions and supply chain volatility.
A platform that engages partners across the supply chain, streamlines consistent collaboration, and enhances supply chain visibility positions retailers to get on-trend products to market on time and increases profitability season after season.
Bamboo Rose and Blue Yonder, a leading digital supply chain and omni-channel commerce fulfillment provider, recently partnered to help retailers unite their innovation, demand planning, product development, and supply chain operations to enable a more profitable, consumer-driven product assortment strategy.
This partnership connects Bamboo Rose’s PLM, Sourcing, and PO management solutions to Blue Yonder’s retail and supply chain planning capabilities to ensure retailers can leverage accurate data and insights to reduce costs, deepen supplier relationships, synergize operations, and accelerate time to market.
Investing in a solution that increases alignment across retail planning, product development, and supply chain processes empowers retailers to create balanced product assortments that meet consumer demand and maximize margins.
Ready for an integrated assortment planning approach? Try the Bamboo Rose platform today.