Introduction to Assortment Planning

Assortment Planning – also known as Range Planning – is an essential pre-season

activity to identify the product that will be bought and made available to your
customers.
The Assortment Plan is where the financial goals of your Merchandise Finance Plan
(MFP) and the strategic goals of your strategic plan come together and are realized
in the selection and quantity of product you buy.
We will cover different aspects of this critical activity in a series of Merchant
Academy courses:
In this course, AP 01 Introduction to Assortment Planning, we cover the purpose of your Assortment
Plan, the key inputs and the desired outcome.
In Merchant Academy course AP 02 Product Roles, we
discuss how different products will play different roles in your
Assortment and how to use these roles to help you plan the
breadth and depth of your buy and your pricing,
merchandising and marketing strategies.
We then cover product lifecycles and how to think about your
target mix for fashion, seasonal, basic and other product
types in Merchant Academy course AP 03 Product Types.
In Merchant Academy course AP 04 Assortment Performance
Analysis we discuss the analysis and insights you will
incorporate into your assortment planning.
Once these concepts are in place, you go through the steps of building and finalizing your Assortment
Plan. These often include:
• Creating a “Shopping List”
• Preparing for Market or a Buy Meeting
• Selecting Product and Quantifying Your Buy
• Reviewing and Finalizing Your Buy
If your assortment includes Core (aka Continuity or Never out-of-stock/NOS) items, then you will also
need to review and update this portion of your assortment on a regular basis. Remember you will need
to reconcile this review and the decisions it leads to with the mix % you set for your Core/Basic product
type (per Merchant Academy course AP 03).
And for a discussion of different ways to approach building assortments for different channels or
locations, see Merchant Academy course AP 10 Assortment Building Approaches.

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 Finally, throughout these courses, keep in mind that the Assortment
Planning tools you use – whether they are Excel-based, homegrown
software or packaged software – guide what inputs you use, what
information you enter and in what sequence you make decisions.
The purpose of these courses is to enhance your assortment planning
through understanding and application of the thought processes and
considerations of product roles, product types, assortment
performance and so on. You can and should adapt the concepts here to
the tactical steps defined by your assortment planning tool and
processes.

What is the Goal of Your Assortment?

Have you ever stopped to ask:
What is the purpose of the products we are buying?
What are we trying to achieve with the Assortment we build?
What will this Assortment deliver financially?
No matter what business you are in, your goal is to select and offer product that will:
• Attract customers to visit and shop
• Deliver on your Brand and company’s promise or value proposition
• Be visually appealing
• Excite and engage customers
• Differentiate from competitors
And ultimately:
• Achieve (or exceed) your sales plan
• Achieve (or exceed) your margin plan

To accomplish these goals, it is essential to know the following about your customer:
• Who they are
• How they behave
• What they want
And then incorporate this into the product you develop or select and your decisions on
how you distribute and present the range.

What Goes Into Your Assortment Plan?

Your assortment plan is built on three key inputs:
1. Your strategic vision for your business
2. Historical performance analysis
3. Financial guardrails

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The strategic vision or plan for your business comes out of your assessment of the
marketplace, your customer, and what you want your business to be. Another
element of the future vision for your assortment are new product innovations that
could be coming from external (supplier) or internal (product
development/design) partners.
Whether or not you typically capture the vision in a formal Strategic Plan, how you
define the future of your business has a major impact on the structure of your
assortment. It will inform:
• What types of product
• Breadth and depth of offering
• What price points
• What features or attributes you want to emphasize or distort
Thus, having a clear picture of what you want your business to become is an important prerequisite to
building an assortment that will deliver what you need.
The second key input is historical performance analysis. We will talk in more depth
in Merchant Academy course AP 04 Assortment Performance Analysis on the
different analyses and the insights you need to take forward into your assortment
plan.
You should also keep in mind that as Assortment Planning can span many weeks –
or even months - you will continually re-evaluate and update your plan based on
new performance results as they become available.

Finally, it is also important to build an assortment that will achieve your financial
goals. This means:
• Buying the product that will deliver the sales you have planned
• Bringing it in at a cost price – with an Initial Mark-Up (IMU) – that will
allow you to hit your margin or profit goals
• Fitting within your purchase or buying budget
Thus, the financial roadmap of a Merchandise Financial Plan (MFP) is the third key
input into your assortment plan.

What Should Your Assortment Plan Give You?

And what is the purpose of all of this activity? When you have completed your Assortment Plan you
should have:
• A list of what you plan to purchase
• The quantity by item you plan to purchase
• Visibility into what the customer will see when they shop with you
(including by channel or by location)
• A check against the target mixes you set – based on your strategic
plan/vision and historical performance insights – for different types of
product and/or attributes

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 • A check or confirmation against the financial requirements for your business – does it fit in your
purchase budget? Will it help you achieve your sales goals? Will it help you deliver your margin
targets?

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