What Is an Assortment Plan? Definition and Its Importance
As a retailer, you know that it’s important to have the right mix of products in your store. But what is an assortment plan? Below, we’ll look at what is an assortment plan and how this process of understanding product hierarchy and historical data helps you determine benchmarks for future sales?
If you want to improve your retail store, consider implementing an assortment planning process. This process uses historical data and knowledge of your products’ hierarchies to forecast future sales and determine which products you should keep in stock.
By understanding your historical product and sales data and using it to forecast future results, you can better plan your sales strategy.
What is an assortment plan in retail?
Assorting products in a retail store helps owners improve the overall shopping experience for customers. By placing products in strategic areas, customers are more likely to find what they’re looking for and make a purchase.
The act of product selection happens regularly, such as daily, weekly, monthly, quarterly, or at some other interval.
Assembling the right assortment of products is more than simply stocking more items. “Assortment Planning process is about looking at the items that drive the most cash,” explains expert Christopher Guillot. It’s not just about sales. It’s also about understanding your cash flow”.
When planning their inventory, retail companies must carefully consider which items to offer and where to store them. This is to ensure that their products meet their customers’ needs. For example, they may place swimsuits in their store more during warmer months, like summer, than during colder ones, such as fall.
Assortment Planning and forecasting are complex but crucial. By understanding consumer demand, retail companies can better meet consumer needs and drive sales growth.
“The right mix of products isn’t just about carrying over old stock and adding new merchandise. It’s also about stocking up on items that sell well and anticipating what will sell in the future.”
The assortment of products that a retail location carries can vary depending on the store and its location. If a company has multiple locations, the products that are carried in each can differ.
A store located in Florida may sell bathing suits all year round, while a store in Montana may only sell bathing suits during their sale season.
When planning out your product offering, you’ll want to consider the size, color, and price of your products. You’ll also need to make sure that you stock up on enough inventory for your target market.
The breadth of your selection refers to the number of categories you have, while your depth is how many variations you have.
It’s important to keep your store fresh and up-to-date. This will give your customers the best experience possible and help increase the conversion rate. Staying stagnant is the quickest way to fall behind the competition.
There are many ways that retailers can boost their bottom line, from holding in-store events to collaborating with social media stars.
Why is assortment planning so important?
In store, 40% of customers are guilty of overspending, while only 25% of web users do.
There are likely several reasons why transactions in physical retail stores are higher than those made online. Impulse buying, more personalized service, and the accidental discovery of products all contribute to higher ATVs in physical locations. In order to optimize a retail location, strategic merchandise planning and inventory management are key.
Having a variety of products in your store is crucial to boosting your conversions.
In addition to buying the right quantities of products, seasonal changes, and customer preferences, there are other factors to consider when developing an assortment plan.
Product assortment planning is important because they help businesses determine what types of items they should carry in their store. By taking into account factors like price, stock, categories, promotion, and product dimensions, business owners can optimize their product assortments to appeal to customers and help meet their business’ objectives.
The blog explains the complexity of implementing an assortment plan in a larger store or enterprise.
Set your goals first
What are your project goals? What would you like to accomplish with this project?
Share with your teammates what your goals are for the campaign. This could be to increase conversion rates by 2%, sell $10,000 worth of products, or achieve a $5,000 net profit.
Use Historical Data
To analyze your best-selling product, take a look at your top 10-20 highest-grossing items and try to understand what makes them so appealing.
Analyze the market trends for the top-selling products.
When analyzing your top-selling items, do any of them share any similarities? Are they all located in the same area of the store? Or were they advertised in the same way? Who bought them? When were they most popular? Analyzing your point of sale data can help you answer these questions.
Know your products
The hierarchy, or order, of a product’s features is the order in which a consumer prioritizes them. This helps the consumer decide which product is best suited for their specific needs.
When customers enter your store, they typically head straight to the clothing department. When browsing the options for a sweater, they generally consider the type of fabric, color, and garment size.
They might look at material, color, and size in that order.
Your product offering should match your product structure, guiding your customers through the buying process.
Remember that every customer is different. Each buyer has their own buying process, and that process isn’t necessarily the same for every product. Providing the best customer experience possible means understanding your customers’ needs.
Use store clustering
If you have more than one store, it can be helpful to organize them based on their location, size, the type of shop, customer base, performance, and more.
You can group your locations together based on their shared characteristics and use these groupings to help plan your assortment of products for each store.
When complementary products are promoted in a retail store, it’s called cross-merchandising. Customers are more inclined to buy these products when they’re grouped together.
If you’re not sure which products to display next to each other, take a look at your POS data to see which items are frequently bought together. This is a great way to cross-promote similar products and take advantage of product affinity.
Take advantage of impulsive buyers
Strategically promoting impulse purchases can increase your Average Transaction Value (ATV) with very little effort. All you need to do is strategically plan your promotions and your merchandise.
To make the most of impulsive buying, place small, inexpensive products near your cash register, top-selling items and high-traffic areas of your shop.
Other methods include:
To encourage people to purchase more, you can advertise discounts, such as buy-one-get-one (BOGO). You can also use phrases like “while supplies last” to create a sense of urgency. Also, make sure to stock up on popular items. And, last but not least, make sure your staff is trained to make recommendations based on past purchases.
Find the perfect balance
It’s important to have a good mix of products across different categories, types, colors, price points, and market trends. This way, you can appeal to a wider range of customers and maximize sales.
Fashion retailers should strike a balance between trendy, stylish clothing and classic, timeless pieces. The success of Christian Louboutin, for example, lies in its ability to update its collections regularly but keep popular, traditional designs in its inventory.
Christian Louboutin’s merchandising and pricing strategies remain strong with product that is constantly changing and is priced based on seasonality
7 Tips for a Successful Assortment Plan
Here are 7 tips to help any retail business successfully plan their inventory.
1. Keep your inventory close to the points of purchase.
2. Place top sellers near each other.
3. Put inventory in heavily trafficked areas of the store.
4. Use a mix of fast and slow-moving items.
5. Plan for customer traffic patterns.
6. Consider customer buying habits.
7. Review your plan regularly and make changes as needed.
The objective is to move small, inexpensive products fast.
Consider your product offerings – size, variation, and category – and be careful not to overemphasize any one area.
Achieving a balance in your product mix is a key element of intelligent assortments. This approach ensures that you don’t sacrifice quality or profit margins in favor of one thing or another. Instead, you can focus on offering consumers the right mix of products at a competitive price.
Best assortment planning tools
Using spreadsheets for your initial product selection process can be simple, but using more advanced tools can simplify this even further. Here are a few options to choose from.
- Retail Pro
- Shelfbucks (shelf-level retail analytics)
- Simparel (Unified Retail Commerce platform)
- Topshelf (merchandise planning software)
Using a planogram can help you figure out the best way to display your product offerings and where to put them. You can also use it to maximize profits.
There are many good options for creating store layouts, including popular options like the dotactiv, jdA, shelf logic, shopshape, and SmartDraw.
Moving on with your selection of products
These principles are geared towards larger retailers, but they can be adapted for any retail company. Here are a few things to consider when developing your merchandising strategy.
1. Have clear goals set for yourself and for your team so you can hold each other accountable and gauge your progress.
2. When analyzing your historical sales data, it is important to look at which goals were realistic and which ones were unrealistic. This can help you plan future product mixes.
3. To effectively develop a sales strategy, you must understand your customer’s buying behavior. This entails understanding how products are arranged, and which products are purchased together.
4. Group your different store locations into “store clusters.”
5. Cross merchandising products can increase the number of accessories that are sold along with the main product.
6. What are some small, inexpensive products that you could use for impulse buys?
7. The balance of products you offer in your store, including categories, size, variation, and price, are essential to your successful product mix.
This article has defined what is an assortment plan regarding retail and why having an assortment plan is key to success. This process of understanding product hierarchy and historical data can help you determine benchmarks for future sales. By taking the time to understand your product mix and historical sales data, you can set yourself up for success in the future.