For both brands and retailers within the fashion, luxury, outdoor and consumer goods industries, assortment planning is at the heart of healthy margins. While products need to be designed well and developed flawlessly, the real challenge begins earlier on with planning. The right product in the wrong location or channel can mean missed sales or heavy discounting. So too can the wrong quantities and pricing strategy end just as badly.
For many, assortment planning is the challenge and the stakes are high, as everyone from the C-suite to operations, fulfilment and supply chain – all the way through to the planners, merchandisers and buyers – well know.
When done well, product assortment – the merchandising mix of specific quantities of each product within a line – can yield the right product at the right place and the right time. Quantities that perfectly match what your customer wants — easy, right?
No. Even big companies struggle with this every day. Take iconic fashion retailer, Guess®. With a retail and wholesale business, a complex product range, thousands of products and SKUs housed in a myriad of spreadsheets and lack of easy to use, easy to access shared, live data, assortment planning had its difficulties. But they managed to save €30M in less than 1 year. So, how did they do it? With a modern planning solution made for the omni-channel era, read their story!
Having access to the right information is not enough. That information needs to be actionable. Live, actionable data enables planners and buyers to make better, more calculated decisions – even in-season- and avoid costly overstocks, aggressive discounting and missed sell-through.
Do Away with Manual Portfolio Management
Brands and retailers typically define their product ranges by both width (the number of different product categories) and depth (the variations within each category). But other factors must be accounted for, including the retail environment. How many stores will receive products and what are the space constraints at each retail location? What is the right allocation for each store type by region?
What about the regional differences which feed down into locality, which means that stores in different places will need different products based on their unique combination of cultural variables and demographics. Buyer persona is another complexity to factor in, the age, income level and lifestyle area all related to the product choices consumers make and how they purchase whether that’s online, in-store or click and collect.
This dynamic scenario of retailing today means planners and merchandisers must consider a variety of factors, including:
- Consumer preferences
- Regional differences
- Channel variations
- Seasonal changeover
Merchandisers also need to develop assortments that:
- Ensure the product mix align with the company’s goals
- Reduce the need for high inventory stock and the expenses associated with it
- Cut down on having to clear excess stock through discounting
- Understand and plan for the continuously changing customer buying patterns
Investing in a planning solution means all this information can live within one place, simplifying the entire process, from start to finish. Here we’ll outline some of the biggest challenges planners, merchandisers and buyers face and how to overcome these assortment planning obstacles by leaning on data solutions.
Analyze Customer Buying Patterns
By asking ‘who is the customer’ and digging into the details of where they shop and what they like to buy, assortment planners can yield new insights into their customer base. This requires analyzing multiple consumer personas and the channels they use to make purchases. Each has different needs, different types of products they are looking for and where they might expect to find them.
Seasonality of goods is another important step most assortment planners look at when starting to build out their plans. Today it’s no longer the traditional seasonal changes of spring and fall lines, many companies want to capitalize on lifestyle practices, local festivals or celebrated holidays with more product refreshes and product introductions. For instance, this could mean stocking swimsuits ahead of a traditionally popular vacation month, or themed products close to a festival or celebrated holiday. Examining past product performance data is key to understanding how well this type of strategy works, particularly highlighting products which failed to move or those that lacked the inventory to meet demand.
Analyzing customer buying patterns and shopper insight can provide the next steps merchandise planners need to fill in data gaps to create better performing store and cluster-specific assortments. Greater insight into the customer experience creates assortment strategies based on real-world information that is predictable and logical, not just aspirational.
Miscalculated Inventory Leads to Missed Revenue
The danger of miscalculating the needs and desires of consumers can significantly impact a brand’s reputation and earnings. Too many of the wrong items lead to undesirable outcomes like extra inventory, which is costly to manage. Companies are then forced to heavily discount to clear excess stock. This eats into product margins and tarnishes brand reputation, with some customers choosing to wait for the huge end-of-season sales to bag themselves a bargain. Conversely, not having enough of a popular product means missed chances for greater revenue. Not only that, but continuously out-of-stock items can frustrate loyal customers.
Although scarcity can have its appealing qualities in luxury branding, too many moments of deficient inventory can cause brands to lose momentum and customer loyalty.
To solve quantity conundrums, a planning tool makes it easy for planners to use data to work out the best product mix, at what quantities to develop and where to place them to generate the largest possible profits. With the ability to accurately plan, teams can truly understand product performance, feeding historical data into effective assortment planning.
Scattered Data Causes Costly Guesswork
A lack of consolidated data leads to a guesswork strategy. Although data can be cumbersome to collect, hiring and training talented planners only for them to spend hours in front of a spreadsheet to clean data, is a huge waste of talented resources. Without giving teams the right tools to manage the complexities of the job means less time for them to accurately plan and analyze. Without past product data to work from, the lack of visibility into product performance or the ability to automate much of the planning process, planners and merchandisers are shooting in the dark when it comes to assortment decision making.
Trying to work out this key information manually for thousands of product SKUs across a number of collections will lead to data overload. Information stored on multiple spreadsheets scattered amongst different sources can become a hugely significant problem, making the information hard to obtain or too time consuming to incorporate into the planning stage. And that, combined with the ever-changing, fast-moving changes that the fashion and consumer goods industries go through can quickly lead to a failed assortment plan and the expensive costs associated with it.
Optimize Visually and with Data
Developing product portfolios manually is no longer an option, it’s time wasting and too susceptible to costly mistakes. Teams need to work from good data to drive decision-making and if much of the planning process can be automated using AI, planners will already have huge understanding on best-sellers and quantities based on previous selling seasons.
On the other side, product portfolios must be developed visually too – how does a collection look altogether? Identifying what textures, products and items are missing is easier and more efficient if able to look through plans visually.
Today teams must be able to plan with data and decide visually. These should be the requirements you look for when searching for an end-to-end planning solution.
A Planning Tool Makes Good Data Great
Increasing planner efficiency is essential for making data useful and usable. Businesses need a variety of tech tools to stay competitive, PLM for one, enables companies to make huge strides towards operational efficiency so products can be launched on time and on budget. But if planners, merchandisers and buyers cannot accurately optimize assortments so the right products are available in the right places in the right quantities at the right time then overproduction and heavy discounting will quickly diminish all those product margin gains acquired during the product development phase.
Centric Planning is the foundational tool that drives a solid assortment strategy that is linked to business goals. See the same information differently – deeply analytical and visual data empower teams to develop accurate and highly optimized assortment plans, exact inventory levels and precise allocation and replenishment of stock. None of which could be possible if teams were manually trying to optimize product portfolios. For businesses to truly eliminate guesswork planning, overproduction and heavy discounting, a company must invest in a powerful, AI-driven solution built for the omnichannel era. A solution like Centric Planning.