Importance of Assortment Planning for Every Business

Before there was even the slightest knowledge of assortment planning in retail, people tend to stick to “their gut” or the feeling based on previous experience in their decision-making process. Maybe assortment planning didn’t get the recognizable respect and influence then as it has now, but it has been present in businesses all over the world. What are the benefits of this sort of planning? Join us to find out.

Nothing confirms the theories of assortment planning as reached and over-achieved targets do, right?  Based on qualitative and quantitative data on how products are purchased, assortment planning still defines available shelf space, budget, available vendors, and retail space. Remember, this has been in practice for an extended period and will be in the future because it brings results. In other words, it brings profit to those who decide to utilize this type of planning in their business, no matter what sphere they are in.


People who implemented this into their routine have been well-aware of the benefits it can bring. As we said, the retailers organize their stock according to SKUs -stock-keeping units, dividing it into two types of categories, and subcategories. Each category and subcategory produce revenue which allows the retailers to decide how much inventory is purchased, the space for it, price, and time to keep in the “top shelf” and make it visible for customers. Bear in mind that this is just a part of the assortment planning process. For more information on the topic visit here.

But, how one wraps his/her head around it depends on previous personal experience, competitor analysis, by researching the conducted survey, analyzing the obtained data and industry trends. Note that, an essential parameter in the assortment planning process is the substitution. This is the situation where the customer is willing to substitute the desired product for another.  There are two types of substitution methods in assortment planning, Stock-level substitution, and Preference substitution. The first one is common in the daily consumable retail like the grocery store.


When a customer buys a product regularly but settles for another similar item if the SKU is out-of-stock represents a classic example of the Stock-level substitution. When a customer wants a product based on the advertisement, brand recognition, or competitor marketing but switches to the most similar available on the SKU because the retailer does not have the wanted product or brand is an example of the Preference substitution. This is quite usual in the big-box stores.

Local Market trends along with Seasonal inventory are the factors that people tend to forget as crucial in assortment planning. Seasonal inventory means keeping in touch with the trend changes, like in the fashion industry for example. Trend analysis, personal experience, sales data, market research with changes, define the planning of the SKUs. The store location is a significant factor in the decision for the assortment planning also because the area will generate different clienteles. We hope that this information will help you when you decide to boost your business.


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