Range Width and Assortment Planning

Putting together a profitable range..

Without a Range Plan..

Assortments are put together in an un-structured manner

Ranges are bought based on availability with supplier rather than to a specific plan
Space and volume of merchandise dont match Low margin products occupy more shelf space

Products bought are either too much or too less to meet the sales and margin plan

Main objectives

Get the sales and margin plan right for the planned area Each store to get a balanced range with sufficient width for sale all year round To plan full potential of each option and aim to maximize margins To plan the display and replenishment qty for each option so that each option is available for the planned duration without running out of stock.

The starting point..

Sales plan

Top down and Bottom up approach

Performance - last year same season and immediate prior season Growth % for in like-for-like stores Business from new stores

Estimates from Operations Market trends

Sales phasing

Analyse sales by week for last year same period Factor in new launches/ promotions

Plot sales over the current period

Buy Plan

Corresponding to the sales plan Taking into account lead times

Manufacturing Transit to warehouse Allocation to stores

Stock Covers to be maintained within control

Stock turn

Buyers aim is to convert stock into cash, the no. of times this can be done in a specific period is the Stockturn

Stock turn = Sales/ Avg Stock High weeks cover = lower stock turn, vice versa

Plan the closing stock in no. of weeks cover at any given time

Eg. 8 weeks (4 on floor, 2 in warehouse and 2 in transit)

Planned Margins

Intake margins at the time of purchasing product (Difference between MRP and Cost) / MRP Balance the high margin and low margin product to achieve overall planned margins Helps to work backwards from MRP

OTB

Simply,

OTB = Planned Closing Stock (Opening stock (Sales+Markdowns)) **

Jan Opg Stk Planned Sales Markdowns Closing Stock Planned Clsg Stk OTB Weeks Cover 450 200 0 250 370 120 7.4

Feb 370 170 10 190 350 160 8.2

Mar 350 180 10 160 340 180 7.6

Apr 340 160 0 180 350 170 8.8

May 350 190 15 145 410 265 8.6

Jun 410 220 30 160 220 60

Building the range

Good assortment is a balance of:

price color styles Fabrics

Price:

Determine the lead-in price, mid price and highest price. Limited number of prices = less confusion for the customer Overall margin should be achieved with lesser price points

Building the range

Color:

Balance the proportion of core colors and highlight colors Prevent overkill of any specific color Control your own preference consciously Involve designers in this process All colors only from the seasons color palette

Building the range

Styles:

Are the styles complimenting each other? Are there too many styles? Or too few? Are key styles available in key colors? Are we taking too much risk by introducing a new style in a new color? Are all key fabrics represented? Are all key styles presented in key fabrics (and key colors)

Fabrics

Planning the assortment

Decide the Average Selling Price:

On basis of last year same season ASP + Inflation If theres a conscious shift to have more expensive products then it should be factored here. Determine the sales per square foot required Check whether the SPF is feasible from the given area

Sales Density:

Planning the assortment

Determine the total qty required per option on an avg.

Find out the total qty sold per option in the last year same season Find out avg qty sold per outlet, extrapolate it to total outlets in the current planning period

Final outcome..

Inputs:

Output:

Sales plan Avg stock holding value

OTB / Avg selling price = Total qty to be bought Total qty / Avg qty per option = Total no. of options required

OTB for the entire period Avg selling price Avg no of pcs that we can sell per option

Range Width Planning

The challenge is to present the best offering in the space available Step 1 - Grade the stores

A, B or C based on size A largest, B Medium sized, C Smallest

Step 2 - Grade the categories in each store

Category Grade 1, 2 or 3 based on business potential

Product Priority Store Type A

Ladies Western 1

Ladies Ethnic 2

Winterwear 3

Home 2

Denims 1

Range Width Planning

Combination of store grade and category grade will determine the Assortment Grade i.e. number of options planned for each category at each location. Since the characteristics will be the same, each store with the same assortment grade will get exactly the same width and depth.

For Eg. From Nov to Jan, winterwear will get more space in all Northern stores than in Western region stores, irrespective of store size. So it will be treated as Grade 1 category even in a C grade store in Delhi and therefore get more space and therefore an appropriate number of options for a C1 Assortment Grade!

Combining the Range Width and Assortment plan

Look at planned footage at each store grade. For eg.

For store Grade A, Number of pcs that can be displayed using optimum fixturing
Combination of face-outs and side-outs Find out Average depth per option sold last year, arrive at total number of options that can be displayed this year. Compare that with the planned number of options as per the Assortment Grade Adjust the buy assortment and footage till the offering looks complete with the aim of maximising sales