Lining Up Your Phalanx: Assortment Planning and Execution
Written By: James Snyder
Customer preferences and market conditions constantly change. Sometimes, those changes are subtle and organic, happening slowly over time but still requiring close observation and adjustments on the part of businesses to serve their customers. In other situations, extraordinary circumstances can drastically and quickly alter preferences and overall conditions in the market, forcing businesses to quickly adapt their strategies to remain relevant.
Every company’s needs are different when it comes to improving assortment planning and execution. However, building an effective evaluation framework is possible for all organizations. With the analysis and context offered by this framework, businesses can make stronger decisions that better align with customer demands.
Your options and specific considerations
The first critical step is having a clear, aligned view of who your customers are and their preferences. This can transcend geographies and demographics. With that critical step accomplished, you can assess your assortment, focused on striking a balance between depth and breadth. With close consideration of both factors, your company can offer the products that customers want and need. It can also simplify your supply chain by reducing inventory that isn’t resonating with customers or contributing to the bottom line.
Customers may value a variety of factors that lead them to your business. A company that has an established model of offering products that address basic needs may do well by offering a more consistent stream of core merchandise -in other words, increasing depth. Eliminating items that aren’t quite as necessary for their market drives cost efficiencies that can be passed along to the customer. On the other hand, a brand whose customers value newness and variety should consider a continued focus on the breadth of their offerings to maintain interest and relevance.
Determining which channel merchandise is offered - online, with more room for more varied products, or in store, where every square foot is valuable space - is also crucial. Expanded online offerings do not have to displace other merchandise, but changes to in-store assortments often do.
You also need to consider if your company can support changes in terms of execution and operations. The best possible plan for adjusting your assortment won’t work out if your organization doesn’t have the resources available to make proactive, immediate changes.
Effective change is only possible with the necessary solutions in place to evaluate the sales performance of new products. Making improvements backed by data is an essential need for businesses and mitigates the potential for negative outcomes.
Taking stock of organizational plans and goals, current operations, viable sales channels and customer preferences before altering your product assortment is paramount for making informed and productive decisions.
Evaluating major changes to assortments
A thorough evaluation of the performance of new assortments is foundational for continued success.
The first question to answer is: Did the assortment generate a favorable gross margin return on investment (GMROI)? Evaluation should not only include the profit generated, but how quickly you are achieving that profit. A balance needs to be struck between profit and time to profit to ensure that investment is being deployed effectively and yielding returns that can then be reinvested.
Clear indicators that a change to assortment didn’t work out include:
Reduced traffic to sales channels, implying customers have been discouraged by a narrow set of offerings.
High excess inventory, indicating a misalignment between product offerings and customer preference.
Low GMROI, indicating a price and/or inventory positioning issue.
Not every change in product assortment will be substantial success. Using each new iteration of your assortment as a learning experience, whether it’s identifying benefits or understanding how problems emerged, can lead to better choices and results in the future.
Having the right systems in place to support both decision-making and analysis is the cornerstone of strong assortment planning and execution. Without the necessary insight, it’s especially difficult to make more than the most basic observations and adjustments. In a fast-paced retail environment, both in brick-and-mortar stores and online, quick and meaningful adjustments aren’t just an advantage - they’re a key differentiator in how you can respond to the market and pivot to serve your customers.
How Anaplan supports retailers for better assortment planning
Anaplan is a deeply configurable business planning software, offering many tools that support assortment planning and execution. Connecting data, people and plans - the core mission of Anaplan’s solutions - allows for more complete, informative and effective assortment planning. A company’s Anaplan model can be built to reflect its operations, resources, and current and future needs. That means analysis is relevant, useful, and can be evolved as needed.
How can Anaplan help your company? There are many benefits to consider. Anaplan empowers your business by giving it the levers to:
Build assortment plans with a variety of options and versions, helping your organization choose the most beneficial mix of merchandise possible.
Model sales in different channels. This can mean the difference between building high excess inventory in one sales channel vs. selling through your inventory at higher margins across your network.
Scenario creation that tests your assortment plans by adding assumptions and creating sensitivity analysis to evaluate options.
In-season assortment management that helps to direct changes in terms of sales volume, channel, price as well as other KPIs.
Anaplan supports assortment planning and execution from the first step to the last. Valuable insights will drive opportunities for building actionable plans, evaluating execution and amending strategy to optimize sales and boost profits. It analyzes your assets and provides the best formation possible for them.
About Allitix
Allitix offers consultancy, support and a deep well of relevant experience to our clients. As an Anaplan Gold Partner, we’ve regularly demonstrated our ability to help businesses utilize this powerful solution to its fullest extent. To learn more about how Allitix can play a vital role in empowering your organization through Anaplan, get in touch with us today.