Assortment planning helps ensure forecasted inventory needs will be able to successfully fulfill customers’ orders. Learn more from NuORDER.
In the world of apparel retail, staying ahead of the competition requires strategic planning and informed decision-making. One thing that significantly impacts a business' 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. Learn more about the value and importance that comes from intentional assortment planning.
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 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 hearing NuORDER Co-Founder Heath Wells discuss problems in retail and how Assortments can help create an effective and efficient process? Watch it 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 customers. 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’s crucial for retailers who want 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 in assortment planning: variety and 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. If you’re just starting with assortment planning, know that 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 commonly used assortment planning models:
Wide Assortment Planning Model
Retailers that use the wide assortment planning model offer an extensive array of product categories, but with limited variations within each category. This approach is particularly well-suited for businesses aiming to cater to diverse customer needs. By allowing your model to cover many categories, you can appeal to the most demographics and customers within your customer base to ultimately maximize profits.
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. Focusing on your specific categories can allow you to bring them more care and attention, which can cascade into how customers feel about what you have to offer.
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 lets retailers 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 diverse product portfolios.
BEST PRACTICES FOR ASSORTMENT PLANNING
Work Within Space Constraints
Available retail space is one of the biggest factors in assortment planning — especially for smaller businesses. Retailers should carefully consider the physical constraints of their stores and warehouses to create optimized assortments that fit their available space.
Consider Supply Chain Logistics
A commonly overlooked best practice in assortment planning involves considering supply chain logistics as you analyze data and plan. This includes evaluating lead times, supplier capacities, and distribution strategies to ensure seamless product availability at the right locations and times.
Incorporate Brand Strategy
Assortment planning must align with a retailer's overall brand strategy and business objectives. Understanding your brand's positioning, target audience, and competitive advantages helps retailers create assortments that resonate with their customers.
Balance Product Staples and Trends
It’s essential to maintain a balance of staple products and trendy designs. Staple products ensure consistent sales, while trendier items can attract new customers and boost excitement.
WHEN TO CONSIDER ASSORTMENT PLANNING
Rapidly changing customer preferences and market trends pose a constant challenge for businesses. There are several common indicators that might mean it’s time to reevaluate your assortment planning strategy, or implement one if you haven’t done assortment planning before. If you’re experiencing inventory imbalances, regular stockouts, insufficient storage space, or a decrease in sales, your assortment planning strategy probably needs attention.
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 ride the waves of trends, consumer preferences, and variable demand.
BENEFITS OF EFFECTIVE ASSORTMENT PLANNING
The benefits of effective assortment planning are abundant, providing retailers with significant advantages. By minimizing the costs associated with slow-moving inventory and stockouts, businesses can optimize their warehouse spaces more efficiently. Aligning assortments with customer preferences and regional demands also elevates overall customer satisfaction and fosters loyalty. The ultimate outcome is enhanced inventory management, amplified sales, and a remarkable boost in profitability.
Assortment planning is the pillar of a successful retail strategy, helping businesses stay flexible in a dynamic market landscape while catering to customers' changing needs and desires. Assortment planning in retail and wholesale optimizes sales potential, minimizes stockouts, and enhances customer satisfaction. It ensures you’ll have a diverse product range tailored to customer preferences to nurture customer loyalty and encourage repeat purchases. Effective planning leads to improved operational efficiency, resource allocation, and profitability.
PREPARING AN ASSORTMENT PLAN IN 5 STEPS
Define Clear Goals
Setting assortment planning goals creates a roadmap for making decisions. It can also help you stay aligned with customer needs and your business’ objectives. By defining clear objectives like optimizing product mix or maximizing sales, businesses can streamline inventory management, reduce stockouts, and capture new opportunities. Effective goal-setting fosters agility, enabling quick responses to market changes and consumer preferences. Ultimately, it empowers retailers and wholesalers to drive growth, boost profitability, and stay competitive in the retail sector.
Analyze Customer Data and Sales Data
Analyzing customer and sales data can offer valuable insights into consumer behavior and preferences, helping you achieve a tailored mix of product and optimized inventory levels. By identifying trends and anticipating demand, businesses can make informed decisions, enhance operational efficiency, and ultimately boost profitability and customer satisfaction in a competitive market.
Anticipate Future Trends
By staying ahead of the curve, businesses can proactively adapt their product offerings to meet evolving consumer preferences and market demands. This foresight makes it possible to make timely adjustments for better inventory management, ensuring the right products will be available to meet demand. Moreover, anticipating trends helps businesses to capitalize on emerging opportunities, maximize revenue potential, and maintain a competitive edge in the dynamic retail landscape. Ultimately, by embracing forward-thinking strategies, retailers and wholesalers can drive growth, enhance customer satisfaction, and achieve long-term success
Create a Well-Rounded Assortment of Products
Creating a well-rounded assortment of products requires strategically selecting a diverse range of offerings that cater to different customer preferences, needs, and occasions. A comprehensive assortment ensures customers have access to an excellent range of products — from everyday essentials to specialty items, thus maximizing sales opportunities and customer satisfaction. By offering a balanced mix of products, businesses can meet the needs of their target customers, enhance the shopping experience, and differentiate themselves from the competition.
A well-rounded assortment also mitigates the risk of inventory imbalances and stockouts, ensuring consistent availability of in-demand items. This not only helps maintain customer loyalty but also fosters repeat business and positive word-of-mouth referrals. A diverse product mix also helps retailers and wholesalers tap into multiple market segments and capitalize on emerging trends and seasonal demands. By continuously evaluating customer feedback, market trends, and sales data, businesses can fine-tune their assortment strategies to stay relevant and responsive to evolving consumer preferences. A well-rounded assortment lays the foundation for sustained growth and the ability to compete effectively in a dynamic retail landscape.
Review and Reevaluate as Needed
By analyzing strengths, weaknesses, and emerging opportunities, retailers and wholesalers can make timely adjustments to their product offerings. This adaptability optimizes sales performance and enhances customer satisfaction. Reviewing and reevaluating assortments also fosters continuous improvement, ensuring businesses stay competitive. Retailers and wholesalers can maintain both relevance and alignment with their business objectives, while driving long-term success.
CONCLUSION
Assortment planning is a fundamental aspect of success in the wholesale/retail and apparel 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 by Lightspeed's assortment planning tool for brands and empower your brand with the tools it needs for assortment planning success.
(Are you a retailer? Learn more about NuORDER by Lightspeed’s assortment planning tool for retailers!)
