Product assortment is the various kinds of goods that a manufacturer produces, or a retailer presents for sale.
Assortment planning is a method of maximizing sales and profits by selecting products based on specified time periods. The objective is to meet financial goals considering seasonality of the stock.
Product assortment has Length, Width, Depth, and Consistency.
- Width: Number of product lines. e.g., formal wear, casual wear, ethnic wear are three product lines under women’s clothing.
- Length: Number of products in a particular product chain or line e.g., three varieties of formal wear (shirts, trousers, and jackets), three varieties of casual wear (kurtas, tops, shirts) and three types of ethnic ware (sarees, salwar suits, and lehengas) in each respective product line of women’s clothing.
- Depth: The different versions of the same product in each product line. e.g., brand, price, size, and color.
- Consistency: The degree to which the product lines relate to each other, e.g., Trousers and shirts of formal and casual wear are consistent, Sarees are ethnic ware so not consistent
Major Retail Assortment Challenge
Finding the balance between the assortment’s depth and width. That is, to determine how many products are within a category? And how many units of each product needed?
Why Assortment Planning Software?
- Accurately allocate store inventory
- Quickly predict customer needs.
- Execute perfect plan to meet the needs
6 Tips to Pick the Right Assortment Planning Software
Right assortment planning software should have the following features.
1. Flexible Framework: Planner should be able to add and define options to adjust width and depth of the business units within assortment planning criteria.
2. Localised Planning: Results from merchandise planning software should help to develop localised assortment plans that lets roll up and comparison to financial plans.
3. Ease of Integration: Methods like store clustering (Definition: grouping stores, website, catalogues recipients, etc. based on similar customers’ behaviour) assists in macro-space planning, merchandise allocation, size optimisation and determining pricing zones, etc. so identify how well the software can integrate with other divisions.
4. Sales Data for Stock Decisions: The software should let retailers use weekly sales and stock input data be prepared based on sales trend also eliminates stock out or overstock situations.
5. Budget and User-Friendly: Select the software that fits your business needs matching your budget figures. Choose one where training staff is easy, and it doesn’t require a high level of expertise to operate it.
6. Valuable Assortment Reports: See if the software is delivering results related to purchases, revenues, sales and margins for each product in the assortment. The retailer can aggregate the reports and assess performance across product and location hierarchies.
Finally, an Ideal Assortment planning software should help you to arrive at significant assortment-related decisions, such as Store and channel clustering, Depth and breadth of ranges, creating consistency between Global and local product varieties, Space requirement needs.
Apart from the above features, the best software will provide Retail Analytics, which supports you to understand your customers, satisfy their desires, study their shopping patterns, check past performance of your categories and watch the market trends.
Overall the software should be able to formulate a plan to deliver the right merchandise, at the right price, at the right time, to the right customers.