The Emergence Of Assortment Planning

By Kevin Permenter, research associate, Aberdeen Group

Proper assortment planning can alleviate concerns about having the right product at the right place at the right time.

According to the recent Aberdeen Mission-Critical Merchandising and Replenishment: Increasing Customer Traffic, Volume, and Profits report, the top two pressures affecting merchandising were the need to maximize gross margin and the need to maximize inventory turns. These two pressures can be at odds with one another. Retailers often employ a markdown strategy in order to move product off the shelves, damaging their gross margins in the process. Take, for example, JCPenney who, by themselves, offered 590 separate sales events last year. As a result, nearly 72% of their revenue was from items that had been marked down by 50% or more. They are not alone in this type of behavior. Many other retailers employ similar (albeit less extreme) strategies to move products. This is exactly where proper assortment planning can take the pressure off retailers by ensuring that the right products are on the right shelves at the right time. In fact, assortment planning strategies, whether creating a tailored, specific, precision merchandise assortments plan or skewing assortments towards value and utility, were (45% collectively) the second most popular strategy among retailers surveyed (behind improving demand forecasting 57%).