Mark Jackley | Content Strategist | June 27, 2023
Success in fashion retail depends on offering the right seasonal styles through the right sales channels. To achieve this goal, retailers rely on assortment planning, a complex process made easier when following a few best practices. With budgets and relevant data to guide planning decisions, any retailer can build fashion assortments that shoppers crave.
Assortment planning is how fashion retailers plan their assortment of seasonal styles and allot them to each store and other sales channels. The idea is to offer the right styles, in the right sizes and colors, through the right channels. While tied to retail planning at a higher level, assortment planning is tactical, responsive to local market conditions and sudden shifts in demand.
Assortment planning is complicated. But it’s easier to understand when you look at the bigger picture, especially in the context of another planning activity, merchandise planning.
Retailers create a merchandise plan to set a budget for seasonal merchandise, the total selection for all channels. The merchandise plan works at the level of product categories—for example, women’s tops—without drilling down into the products themselves.
But fashion retailers don’t sell categories; they sell products and styles. And this is where smart retailers can gain a competitive edge. Mindful of the budget and data analysis (mostly involving current and historical sales information), they plan the fashion assortments for each store and channel.
A fashion chain will scour the wholesale market to find the best product styles for categories such as women’s tops. Long-sleeve blouses surely will be in the product mix, offered in styles such as button-down, scoop neck, and pullover. Shortly before a season kicks off, the retailer sends each store its allotment of blouses and other products in a range of sizes and colors. Naturally, higher-performing stores get more of the assortment.
Not every fashion retailer follows the same process, but the most successful ones start with a merchandise plan that guides the assortment plan. The assortments are where the higher-level plan comes to life on delivery trucks, store shelves, and bulging shopping bags.
Often, assortment planning occurs at least six months before a season begins. Using a wealth of data, especially data on past sales transactions, planners create assortments of styles for all channels—each store, website, and catalog. As the season kicks off, the styles are allocated to individual channels, taking into account factors such as channel or store performance over time, space limitations, and geographic location.
For example, a planner might include three-season jackets in the fall assortment. But fall starts earlier in Minnesota than in North Carolina, so stores up north will receive jacket deliveries earlier, and likely in greater volume. If the data shows a store in St. Paul, Minnesota, has trouble moving fleece jackets, the planner might allot it only one or two styles, in limited colors and sizes. Even if market trends show strong potential for fleece jackets, ground-level demand dictates the decision. If a certain fleece isn’t selling, the planner might cancel restock orders.
These factors show why assortment planning tends to be so tactical. Preseason planning is the equivalent of a football team gearing up to have a successful season. When the season arrives, it’s game time—retailers monitor current demand, daily sales results, and fluctuating inventories to make any needed adjustments. While the overall plan won’t change in season, most retailers have the flexibility to modify it—for instance, by ordering extra quantities of black jeans if they’re flying off the shelves.
Assortment planning is important because it determines the precise mix of products each store gets—assortments that fit in its space, work to its strengths, cater to its customers’ tastes and buying habits, and drive sales. A one-size-fits-all approach doesn’t work for most retailers. Stores vary in size, sales potential, and customer demographics. When each store offers the right styles in the right amounts, they sell more and are better able to plan, control their inventories, and avoid cluttered or empty store shelves. Ultimately, assortment planning matters because when it’s executed well, it increases sales, cash flow, and profitability.
This question deserves a two-part answer: what the plan itself includes and which tools and methods are used in the planning process.
Let’s start with the key parts of any final plan.
Now let’s look at useful planning tools and methods.
Assortment planning models aren’t cookie cutter. But even fashion retailers that customize their plans tend to start the process with one of the following models.
Strategically, retailers use assortment planning to meet financial goals by offering the best assortments of seasonal fashion styles.
Tactically, retailers do assortment planning to tackle common challenges, such as boosting sales at a smaller store with an assortment of styles tailored to its sales potential and space restrictions.
Optimally, assortment planning should be an ongoing effort, but it is especially critical in certain scenarios:
Assortment planning starts by reviewing the merchandise plan, the higher-level plan that sets budgets for each product category. The merchandise plan guides decisions on seasonal product styles to include in the fashion assortment for every store and channel.
In executing the merchandise plan, assortment planners begin with data. Comprehensive, accurate data in fine-grained detail is the key ingredient in a successful plan. What products have sold well over the past few years? It’s not enough to know that a dress flew off the shelves. Was it a shirt dress? A shift? Which sizes and colors were popular? And which stores sold the most? Seasonal sales data going back a few years gives planners insight on fashions likely to sell this season.
In the real world, fashion retailers use assortment planning to get results.
Mr Price, a South African fashion retailer for women, men, and kids, used assortment planning to make midseason adjustments during the pandemic. When stores reopened after being closed for several months, cautious shoppers favored local stores over those in crowded malls. With demand higher in smaller stores, Mr Price changed tactics by allotting them more products than before and reducing quantities to larger mall locations. Doing this let Mr Price revive sales, reduce unsold inventory, and protect the bottom line.
Ulta Beauty, a national chain that sells cosmetics, fragrances, hair care products, skin care products, and more, uses assortment planning to stock more than 1,300 stores. A more carefully planned assortment has improved merchandise displays by stocking the right quantities of products. It has also helped coordinate orders from hundreds of suppliers.
Forever 21, the women’s fast-fashion retailer, uses assortment planning to zero in on styles that will sell. It analyzes data from hundreds of stores to make planning decisions, down to the level of color, size, fabric, and even neckline.
When retailers use the following tips, they enter the fashion season with robust assortments that set them apart from the competition.
This higher-level plan sets the budget for seasonal products. Knowing spending limits helps assortment planners decide which product styles to offer.
When planning an assortment, retailers analyze seasonal sales going back at least two to three years. They need to see which styles sold well or didn’t, which types of customers bought them, and which stores or ecommerce sites sold the most units.
Study customer segments and demographics to make informed decisions about which styles to stock for whom, and where.
Use an assortment planning model that fits the merchandise plan and thus helps reach financial goals. Wide planning models feature more product styles, deep models more sizes and colors.
Group stores into clusters by size, sales volume, or other attributes important to the business. It’s easier to create assortment plans for a smaller number of clusters instead of every store.
Most fashion retailers balance their assortment between perennial bestsellers and promising new styles. If women’s V-neck sweaters are a perennial favorite, a retailer might add roll-neck sweaters in fun colors or patterns.
Shoppers love to support local artisans and manufacturers. Fashion retailers often round out product assortments with clothing styles and accessories made nearby.
Add complementary products to seasonal assortments. A retailer selling kids’ sneakers during the back-to-school timeframe might stock up on sweatpants for stores to display them together. Historical point-of-sale data reveals which products people buy in the same transactions.
Round out the assortment plan with hard-to-resist styles. For instance, inexpensive earrings displayed on endcaps or near checkouts can lift sales.
Fashion retailers rely on Oracle Retail planning applications to plan assortments, refine assortment strategies, and anticipate in-season trends with ease. A highly visual workflow helps define and execute local market and microsite assortments, improve conversion of traffic into higher sales/margins, and increase customer satisfaction. The application suite makes it easy to include data such as sales history, one-off buys, and style and color preferences across retail locations. Sophisticated logic lets retailers complete their assortments quickly and effectively, freeing retail planners to innovate to boost in-store and online traffic. With a standardized assortment planning process and centralized data, retailers can improve inventory management and maximize their investments.
Why is assortment planning important?
Assortment planning matters because it helps fashion retailers offer the right products in the right channels at the right time.
What are the two key factors in assortment planning?
Variety within a product category and variations of each product (style, size, and color) are both key to assortment planning. Some experts believe that having a balanced assortment of classic and trendy styles is just as important.
How do you make an assortment plan in retail?
When making assortment plans, retailers review their merchandise plan, financial goals, and budget, plus analyze copious amounts of data to guide decision-making.