In the world of clothing retail, staying ahead of the competition requires strategic planning and informed decision-making. One thing that significantly impacts a business's success is assortment planning. A well-executed assortment planning strategy can be a game changer, ensuring a retailer offers the right products, at the right time, and in the right quantities to meet customer demands and preferences.
What is Assortment Planning?
Assortment planning is the process of carefully selecting and curating the optimal mix of products to be offered by a retailer or wholesaler. This vital strategy involves analyzing sales data, market trends, customer preferences, and other relevant factors to make informed choices. The primary goal of assortment planning is to ensure that the product range caters to a diverse customer base, aligns with seasonal demands, and maximizes profitability.
How is Assortment Planning Used in Wholesale?
In the wholesale industry, assortment planning plays a crucial role in streamlining business operations and driving success. Wholesalers work closely with retailers to provide them with a curated selection of products that align with customer preferences and seasonal trends. By leveraging data and market insights, wholesalers can tailor assortments to suit the needs of different retailers, thereby enhancing their partnership and increasing overall sales. Additionally, assortment planning helps wholesalers optimize their inventory levels, reducing carrying costs and minimizing the risk of overstocking. Interested in watching NuORDER Co-Founder Heath Wells discuss problems in retail and how Assortments can help create an effective and efficient process? Watch here.
How is Assortment Planning Used in Retail?
Within the retail sector, assortment planning is even more critical due to the diverse range of products and changing consumer preferences. Retailers employ assortment planning to ensure they offer a comprehensive mix of products that cater to their target audience. By analyzing data, such as historical sales performance and customer feedback, retailers can make informed decisions about which products to stock and how to tailor assortments for specific demographics or geographic locations. Effective assortment planning also helps retailers optimize shelf space, reducing instances of stockouts and ensuring that products with higher demand are adequately represented.
In the world of retail, one key strategy can significantly impact a brand's success: assortment planning. Assortment planning involves thoughtfully curating and managing product assortments to align with customer preferences, seasonal changes, and historical sales data. In this article, we'll explore assortment planning and why it is crucial for retailers looking to thrive in today's competitive market.
Getting Started with Assortment Planning
Offer an Optimized Product Mix: Variety vs Variation
There are two elements that retailers use when assortment planning: variety & variation. Variety refers to the breadth of product categories offered by a retailer. For instance, a clothing retailer might offer categories like tops, bottoms, and accessories. On the other hand, variation refers to the depth within each category, such as different styles, colors, and sizes of tops.
Striking the right balance between variety and variation is essential as offering too many product options can overwhelm customers, while too few may lead to missed sales opportunities. An optimized product mix means retailers provide customers with the products they desire while maximizing sales opportunities. It's a thoughtful approach that relies on market analysis and data-driven insights to create well-optimized product mixes.
Use Data to Make Informed Decisions
Data plays a pivotal role in successful assortment planning. Retailers rely on sales data, customer preferences, demographic data, seasonal trends, market trends, and historical performance to avoid stockouts and make strategic inventory decisions.
With the help of advanced analysis tools like NuORDER’s assortment planning tool, brands can accurately forecast demand, identify top-selling items, and optimize inventory levels. Leveraging these data-driven insights empowers retailers to anticipate changing customer needs and adjust their assortments accordingly.
Set Realistic Goals and Expectations
Assortment planning isn’t about perfect predictions. Instead, it’s about creating actionable plans for products based on all available information. When just starting with assortment planning, setting realistic goals and expectations helps retailers refine assortment strategies to meet customer demands effectively without feeling overwhelmed by changes or bumps on the road.
Types of Assortment Planning Models
When it comes to assortment planning, retailers have a range of models to choose from, each catering to specific business goals and customer preferences. Let's explore some of the commonly used assortment planning models:
Wide Assortment Planning Model
Retailers adopting the wide assortment planning model offer an extensive array of product categories, but with limited variations within each category. This approach is particularly suited for businesses aiming to cater to diverse customer needs.
Deep Assortment Planning Model
Conversely, the deep assortment planning model focuses on fewer product categories but offers an extensive range of variations within each category. This model is ideal for businesses emphasizing product specialization and personalized customer experiences.
Scrambled Assortment Planning Model
The scrambled assortment planning model involves branching out into new product categories beyond the core offerings. This dynamic approach allows businesses to explore new markets and cater to diverse customer interests.
Localized Assortment Planning Model
Localized assortment planning is all about tailoring product assortments to align with the preferences and demands of customers in specific regions or locations. This model enables retailers to effectively cater to regional trends and cultural preferences.
Mass-Market Assortment Planning Model
Finally, the mass-market assortment planning model focuses on offering a wide range of products across various categories, appealing to the broadest possible customer base. This approach is commonly adopted by large retailers boasting a diverse product portfolio.
Best Practices for Assortment Planning
Work within Space Constraints
Especially for smaller businesses, available retail space is one of the biggest factors in assortment planning. Retailers should carefully consider the physical constraints of their stores and warehouses to create optimized assortments that fit available space.
Consider Supply Chain Logistics
A commonly overlooked best practice in assortment planning includes considering supply chain logistics when analyzing data and making plans. This includes evaluating lead times, supplier capacities, and distribution strategies to ensure seamless product availability at the right locations and times.
Use Brand Strategy
Assortment planning must align with the retailer's overall brand strategy and business objectives. Understanding the brand's positioning, target audience, and competitive advantage helps retailers create assortments that resonate with their customers.
Balance Product Staples and Trends
Maintaining a balance between staple products and trendy offerings is crucial. Staples ensure consistent sales, while trendier items can attract new customers and boost excitement around the brand.
When to Consider Assortment Planning
Rapidly changing customer preferences and market trends pose a constant challenge for businesses. There are several common indicators that mean it’s time to reevaluate your assortment planning strategy, or implement one if you haven’t used assortment planning before. Inventory imbalances, regular stockouts, insufficient storage space, or decreases in sales, your assortment planning strategy likely isn’t working for you.
Assortment planning inefficiencies lead to loss of profitability and lower customer satisfaction, ultimately leading to missed growth opportunities. Effective, optimized assortment planning allows brands to smoothly ride waves of trends, customer preferences, and variable demand.
Benefits of Effective Assortment Planning
The benefits of effective assortment planning are abundant, providing retailers with significant advantages. By minimizing carrying costs linked to slow-moving inventory and mitigating stockouts, businesses can optimize their warehouse space efficiently. Moreover, aligning assortments with customer preferences and regional demands elevates overall customer satisfaction and fosters loyalty. The ultimate outcome is enhanced inventory management, amplified sales, and a remarkable boost in profitability.
Assortment planning stands as the keystone of a successful retail strategy, helping businesses remain flexible in a dynamic market landscape and cater to their customers' changing needs.
Conclusion
Assortment planning is a fundamental aspect of success in the wholesale/retail and clothing industries. By strategically curating product offerings based on customer preferences, market trends, and data-driven insights, businesses can improve customer satisfaction, minimize costs, and drive revenue growth. Embracing the power of assortment planning is the key to staying competitive in today's ever-changing retail landscape. With the right strategies in place, retailers and wholesalers can confidently pave the path to sustainable success.
Learn about NuORDER's assortment planning tool for brands and empower your brand with the tools it needs to succeed at assortment planning.
(Are you a retailer? Learn more about NuORDER’s assortment planning tool for retailers!)
