Assortment planning in retail involves selecting the collection of products which will be on offer in particular locations and during a specified season. It considers the financial objectives and seasonality of the product selection in a way so that both you and your customers gain from the outcome. Making the right product picks and bringing in the right quantities of supplies to match market demand are decisions that collectively make an assortment plan.
The selection process of products in assortment planning is done through a thorough evaluation of the product attributes like brand, functionality, price, size, stock keeping units (SKU) etc. to comprehend the preferences of the customers. The assortment plan mentions the products that come under your categories, sub-categories, segments, and sub-segments.
Why Assortment Planning?
The challenge is to estimate the right amount of stock for the shelves. If the stock is less than the optimal amount, there are chances that potential customer and sales are lost. If it is exceeding too much beyond the optimal amount, then the excess inventory is put up for offers and income is lost. This is why assortment planning in retail is of paramount importance. On average, in-store shoppers spend more than online shoppers. In fact, 40% of in-store customers spend more than they had planned compared to just a quarter of online shoppers. Hence, for financial improvements of a store assortment planning should be performed. Assortment planning does not only mean inventory purchasing and seasonality. Other considerations include:
- Price point
- The shelf life of a batch of products
- Category proportions
- Width and depth: The width is the number or variety of different product categories. The depth is the amount of product and brand variation within an individual category.
- Visual merchandising
- Store layout
- Promotions
- Setting up Growth goals (Should start assortment planning process from this.)
- Reorder points
- Lead time
Assortment planning is necessary for large retailers with merchandising teams and bigger budgets, though the principles apply to any retail environment. Assortment planning starts with:
- Setting goals to keep track of the team and progress made over time
- Historical data to be examined well to judge the rational goals and products that need to be added in the bin.
- Include the understanding of the customer purchase decisions through product hierarchy in the assortment planning process.
- Use clustering for store grouping based on both performance (e.g. sales volume) and non-performance (e.g. store size) parameters. The store clusters support assortment planning and allocation as well as maintaining a customer-centric merchandise approach
- Cross merchandise should be performed for better shopping experience of customers at a time to gain customer loyalty, attract more foot traffic and increase sales.
- Figure out the appropriate balance in product categories, sizes, variations, Stock Keeping Units, prices etc.
Efficient assortment planning can only be done with accurate data exchange between your inventory, space allocation and assortment plan. Planograms holds precise data on space allocations and days of supply information of each product. Assortment planning or inventory planning and Planograms both complement each other to help in financial improvement and maximize profitability. Any alterations made in the assortment affects the planogram accordingly. Here, alteration of assortment refers to the addition or removal of any product. Product addition to the assortment plan leads to changes in the planogram. Product removal on the other hand if there is stock left on the shelf then no change in the planogram if not the necessary changes ought to be made.
Shelf Space Planning through planogram creation maximizes space and efficiently executes demand-driven category and assortment management. Planogram creating software helps to create cluster and assortment optimized individual store planogram. After a complete assortment planning process, planogramming is done that results in a single picture of the assortment plan including new, ongoing, and leftover product that can be assigned to planograms to align with space plans and constraints.
Nexgen POG is a cloud based powerful planogram creation software for visual merchandising that provides the user with a detailed assortment optimized planogram for better shelf spaced plan. The unlimited licensing of Nexgen POG allows easy editing of the planogram throughout the organization. Nexgen POG is a cost-effective visual merchandising planogram software.
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