Assortment planning is a critical part of retail success. It helps brands decide which products to stock, how much to buy, and where to place them. With the right assortment, brands can increase sales, improve customer satisfaction, and manage inventory more efficiently.
What Is Assortment Planning?
Assortment planning is the process of selecting and organizing a store’s product mix. Brands must consider market trends, seasonal trends, customer preferences, and financial goals. A good assortment planning process ensures the right products are available at the right time and in the right stores.
Why Assortment Planning Matters
Assortment planning helps stores have the right products at the right time. This keeps customers happy and boosts sales.
It’s especially important for seasonal and trendy items. Apparel brands must plan ahead so spring and summer clothes arrive on time. Stores selling holiday decorations or gardening supplies need to stock up before demand rises.
If planning is off, stores might have too much unsold inventory or run out of popular items. This can lead to big discounts or lost customers.
When done correctly, assortment planning helps brands:
- Meet Customer Demand Ensuring shoppers find what they need, improving their experience.
- Maximize Sales & Margins Reducing markdowns and optimizing pricing strategies.
- Improve Inventory Efficiency Preventing overstocks and ensuring top-selling items are always available.
- Stay Agile & Competitive Adapting quickly to market trends and consumer preferences.
- Align with Financial Goals Supporting revenue targets and inventory productivity metrics.
Ultimately, assortment planning is a critical driver of business success, ensuring brands stay ahead of demand while managing costs effectively. The next sections will explore the key steps, best practices, and strategies to optimize assortments using data and technology.
Assortment Planning Models
Brands use different models depending on their strategy:
- Wide Assortment A large variety of products with fewer options per category (common in department stores).
- Deep Assortment Fewer product categories but many variations in each (common in specialty stores).
- Scrambled Assortment Unrelated products added to attract impulse buyers (e.g., a clothing store selling beauty products).
- Localized Assortment Tailoring products to specific store locations (e.g., winter gear in northern stores, lighter clothing in southern stores).
The Assortment Planning Process
Assortment planning follows a step-by-step process to help brands decide what products to stock, where to place them, and how to adjust as demand changes. Below are the key steps to creating an effective assortment plan.
1. Collect and Analyze Data
Brands start by reviewing past sales, inventory reports, and customer insights. This helps identify top-selling products, slow movers, and emerging trends. Competitive research and industry reports provide a broader market perspective. Understanding customer preferences allows planners to make smart stocking decisions.
2. Forecast Demand
Using past data, brands predict future sales. This includes considering seasonal trends, promotions, economic factors, and local events. AI-powered tools help improve accuracy by analyzing multiple factors at once. A strong forecast prevents overstock and stockouts, keeping inventory levels aligned with demand.
3. Select the Right Products
Once demand is projected, planners choose which products to include. They must balance breadth and depth (more on this later).
Brands also decide which new products to introduce and which slow-sellers to remove.
4. Optimize SKUs
At the SKU (Stock Keeping Unit) level, brands fine-tune their assortment by removing low-performing products and avoiding duplicates. If two similar items serve the same need, one may be eliminated to simplify inventory. SKU optimization keeps costs low, improves shelf space use, and makes shopping easier for customers.
5. Allocate Inventory Smartly
Brands distribute inventory based on store type, size, and customer demographics.
- High-traffic stores get a larger selection.
- Smaller stores carry a focused, best-selling assortment.
- Regional differences matter—warmer locations stock lighter clothing, while colder areas get more coats.
Smart allocation prevents excess stock in the wrong places and ensures popular items are available where they’re needed.
6. Execute and Merchandise
Once the plan is set, teams work together to get products into stores.
- Procurement and suppliers ensure products arrive on time.
- Merchandising teams update store layouts and shelf placements to highlight key items.
- Assortment planning software helps streamline execution by tracking orders, inventory, and store layouts.
7. Monitor and Adjust
The process doesn’t end once products hit the shelves. Brands track sales performance in real time and make adjustments:
- Restock fast-sellers.
- Discount or relocate slow-moving items.
- Shift inventory between locations if needed.
At the end of a season, reviewing results helps improve the next planning cycle.
By following these steps, brands can create a flexible, customer-focused assortment that maximizes sales and minimizes waste.
Best Practices for Effective Assortment Planning
A well-planned assortment meets customer needs, improves inventory management, and boosts profits. Here are key strategies to refine your assortment plan.
1. Balance Breadth vs. Depth
Brands must choose between offering many product categories (breadth) or providing lots of options within a single category (depth).
- Broad Assortment: Stores carry many product types but fewer choices in each (e.g., a department store).
- Deep Assortment: Stores focus on one category but offer many variations (e.g., a sneaker store with 50+ styles).
The right mix depends on customer expectations. Essential categories may need depth, while convenience items may require a broader mix. Reviewing sales data helps find the right balance.
2. Use Store Clustering for Localized Assortments
Not all stores serve the same customers. Grouping stores by location, size, and shopper preferences helps tailor assortments.
- City stores may need more trendy items, while suburban stores may stock more everyday essentials.
- Cold regions need more winter clothing, while warm areas require lighter apparel.
Analyzing local sales and customer feedback ensures each store gets the right mix of products.
3. Plan for Seasonal & Market Trends
Customer demand changes with the seasons and trends, so planning ahead is crucial.
- Plan inventory months in advance to match peak sales periods.
- Use trend-tracking tools and social media insights to spot rising product trends.
- Keep a flexible budget to adjust for in-season demand shifts.
By staying ahead of trends, brands sell more at full price and avoid large markdowns.
4. Use Customer Data to Improve Product Selection
Brands can refine assortments by analyzing customer purchase history, online browsing, and feedback.
- Identify top-selling items for different shopper groups.
- Adjust selections based on demographics and shopping habits.
- Spot product gaps, such as rising demand for sustainable materials.
By reviewing customer insights regularly, brands can keep their assortments relevant and appealing.
5. Optimize Assortment Across Channels (Omnichannel Planning)
Shoppers move between stores and online, so inventory should be optimized for both.
- Large or niche items can be sold online-only, while fast-selling products should always be in stock in stores.
- Online search trends can help decide which products to stock in physical locations.
- Offering in-store pickup for online purchases expands selection without overloading store inventory.
A well-integrated assortment across channels improves convenience and increases sales.
Optimizing Assortment Planning
Even with a strong process in place, brands should constantly refine their approach to assortment planning. Optimization ensures the plan stays data-driven, efficient, and aligned with business goals.
Use Data & AI for Smarter Decisions
Instead of relying on guesswork, brands should use analytics and AI to make better choices.
- AI can detect sales patterns, like products selling year-round in unexpected locations.
- Predictive tools help forecast demand based on customer behavior and past sales.
- AI improves store clustering by analyzing location-based shopping trends.
Data-driven planning helps brands adjust assortments in real time and stock the right products in the right stores.
Align Inventory with Financial Goals
A successful assortment plan balances customer needs with business profitability.
- Track product profitability by reviewing margins, turnover rates, and sales impact.
- Match assortment plans with budgets to avoid overinvesting in slow-moving products.
- Regularly remove low-performing SKUs to make room for better-selling items.
Optimizing inventory increases sales per SKU and improves cash flow.
Maximize Store Space for Better Sales
Every inch of store space should be used wisely. A strong assortment plan considers shelf space and store layout.
- Best-selling products should be placed in prime locations, while slow sellers take up less space.
- Large stores may carry a wider selection, while smaller locations focus on top-performing items.
- Sales per square foot data helps guide space and inventory decisions.
A well-planned layout improves both sales and the shopping experience.
Key Weekly Reports for Assortment Planning
Brands rely on weekly performance reports to optimize their assortment strategy.
1. Sales Performance by Category Identifies best-selling and underperforming products.
2. Inventory Turnover & Stock Levels Tracks stock movement, avoiding overstock and stockouts.
3. Pricing & Margin Analysis Ensures profitable pricing strategies and prevents markdown losses.
4. Competitor Benchmarking Keeps track of competitor pricing, new products, and trends.
5. Customer Insights & Trend Data Uses search data, customer feedback, and social media trends to refine assortments.
Brands using real-time analytics dashboards can react faster and keep their assortments optimized at all times.
Key Stakeholders in Assortment Planning
Effective assortment planning requires collaboration across multiple departments:
- Buying & Merchandising Teams Select the products and ensure alignment with brand strategy.
- Marketing & Sales Teams Influence product selection based on campaigns and customer demand.
- Supply Chain & Inventory Managers Ensure smooth product flow and optimal stock levels.
- Store Managers & Regional Planners Provide local insights and execution feedback.
- Data Analysts & AI Teams Use forecasting tools to optimize planning and improve accuracy.
Cross-functional collaboration ensures a well-rounded, data-driven assortment plan that meets both business and customer needs.
How Assortment Planning Fits into the Broader Retail Merchandising Strategy
Assortment planning works alongside merchandise financial planning (MFP) and allocation to ensure Brands offer the right products in the right locations. While MFP sets financial targets and inventory budgets, assortment planning determines the ideal product mix, and allocation distributes inventory efficiently across stores and online channels.
MFP informs assortment planning by providing sales goals, margin targets, and inventory budgets, helping Brands decide which categories, styles, and price points to prioritize. Assortment planning then ensures that selections align with customer demand, seasonal trends, and financial constraints.
In allocation, assortment plans are adjusted based on store-specific factors like regional preferences, store size, and past sales performance. AI-driven tools enhance this process by dynamically optimizing allocations in real time, ensuring high-performing stores receive enough stock while minimizing excess inventory in slower locations. By integrating these three elements, brands create a more strategic, data-driven approach to merchandising.
How Assortment Planning Software Helps
Brands face increasing complexity in managing product assortments. AI-powered assortment planning software simplifies the process by leveraging data, automating decisions, and optimizing inventory to match demand.
- Data-Driven Decisions AI analyzes sales history, customer behavior, and market trends to help Brands stock the right products. This eliminates guesswork and ensures assortments align with real demand.
- Optimized Inventory Levels AI predicts seasonal demand, regional variations, and sales trends, preventing overstock and stockouts. This leads to better inventory turnover and fewer markdowns.
- Real-Time Assortment Adjustments With live sales tracking, brands can shift inventory across locations, respond to demand changes, and avoid excess stock in underperforming stores.
- AI-Powered Trend Forecasting By analyzing social trends, search data, and buying patterns, AI helps brands introduce the right products at the right time, staying ahead of competitors.
- Financial and Performance Planning Assortment software integrates budgeting, margin analysis, and sales forecasting, helping brands maximize profitability while maintaining a balanced product mix.
- Scalability Across Channels AI-driven tools adjust assortments for different store formats, online platforms, and regional preferences, ensuring consistency and relevance.
With AI-powered assortment planning, brands can create customer-driven assortments, improve inventory efficiency, and stay agile in a competitive market.
Final Thoughts
Assortment planning is essential for retail success. By selecting the right product mix, using data-driven decisions, and optimizing store allocations, brands can improve sales and customer satisfaction. With the help of assortment planning software, businesses can streamline the process and stay ahead of market trends.
By implementing a strong assortment planning strategy, brands can offer the right products at the right time, creating a better shopping experience and increasing profitability. Speak to an expert to learn how Toolio can help you streamline assortment planning.
