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

What Good Assortment Planning Does

Assortment planning breaks the Merchandise Plan down into the components that
enable the planner to address customer preference and need. These components are
product attributes, styles, colors, and SKUs. By addressing these components, the
assortment plan becomes the transition to the customer by way of the store.
In developing a good assortment plan, the retailer hopes to:
• Manage inventory while addressing customer need and demand
• Develop a complete range of merchandise for presentation
• Enhance and maintain the company philosophy and image
• Support and execute the overall merchandising strategy
• Integrate with other planning processes, such as merchandise allocation
The assortment plan, then, provides the most effective way to balance the
presentation of merchandise to the customer. The properly assorted presentation
ensures enough selection without overstocking and strikes the right balance
between breadth (e.g. number of styles) and depth (quantity of each style). In
addition, the good assortment plan considers seasonality, to provide the right
merchandise flow.
Because assortment planning addresses the most detailed element of merchandising
to the customer—the items for sale—the process is often very detailed and
timeconsuming. Automation is therefore a must in building effective assortment plans.
Automation Facilitates a Comprehensive Plan
To build a comprehensive assortment plan, details in a number of areas come
into play, and the planner could not realistically manage that level of detail
without an automated system. The automated system makes it possible to
address dozens of parameters in these four key areas:
• Product Attributes. – This set of parameters helps the retailer relate to
the customer, by factoring into the plan brand, vendor, fabric, silhouette,
pricepoint, and theme. These parameters enable the planner to tailor the
assortment and build the proper relationships among the various 2
components. For example, the planner can determine the right percentage
of brands, the right quantity of each brand, and similar calculations.
• Store Structure/Store Characteristics - These parameters enable the
planner to categorize stores into groups, a critical step before one can
define product assortments. Grouping by the size, volume, and type of
store, the climate, and the customer type helps the planner meet each
store’s particular demands. The store characteristics are pivotal in
micromarketing and they also support distribution to the stores.
• Time Dimension/Product Seasonality - The time dimension for an
assortment plan considers the usual week, month, and season definition,
along with product transition and crossover between seasons. But
assortment planning also needs smaller time periods or mini-seasons such
as back-to-school, holiday, and summer clearance. These overlapping time
periods consider events and/or time periods that help define the product
characteristics needed to address customer demand.
• Space Dimensions/Space Utilization - As the assortment plan develops,
it allocates available space based on the product definition. Factors such as
the number of styles and quantities of each style will affect space
utilization. Product dimensions, product density, product display
requirements, store structure, store layout, store “look,” and visual
merchandising all affect the space plan and, consequently, the assortment
plan as well.
Managing the Volume of Detail
To handle all of the calculations in these key areas, assortment planning
systems that go beyond simple spreadsheets are becoming available for
retailers. These systems apply the automation necessary handle the
voluminous and tedious detail necessary in today’s assortment planning
process. Because these systems can churn through the calculations in all of
these areas, retailers are better able to develop a good assortment plan.