Merchandise Assortment Planning Software

What is Merchandise Assortment Planning Software?

Merchandise assortment planning software enables retailers to place the right products in the most effective locations in order to maximize sales and margins, while avoiding potential stockouts or over stock situations.

The solution works by analyzing previous sales performance and building core product-line assortments in line with financial objectives, while taking into account factors such as seasonal and geographical variations and trends.

Merchandise assortment planning tools also give planners the ability to range assortments across store grades, using their knowledge of the business and the buying personas of their customers, in order to optimize the inventory in each store and channel.

Why Do I Need a Merchandise Assortment Planning Solution?

merchandise assortment planning software

Retailers face the challenge of satisfying today’s ever more unpredictable and demanding consumers who want and expect their favorite retailers to have exactly what they’re looking for in stock and also a wide selection to choose from. This is becoming ever more complex with multiple shopping channels and consumers armed with mobile devices and more information than ever before.

Increasing emphasis on customer centricity has also affected retailers’ ability to plan effective and profitable assortments. Point-of-sale data shows that shopper preferences vary greatly from region to region and even at the store level.

As such, retailers must get their assortments planned correctly right from the start as they will drive the success of the business over the next months and seasons. That means finding the balance between the assortment’s width – the number of products within a category – and its depth, which is defined as the number of units for each one of those products. Failing to do so typically results in one of two problems: either the assortment is too narrow and doesn’t offer the range of products consumers expect, or the assortment is too broad. If it’s the latter, the retailer runs the risk of product obsolescence and paying the price in the form of markdowns.

So, retailers are challenged to plan their merchandise assortment so that it offers the right amount of the right products in the right stores and channels at the right time in order to meet customer demand and maximize sales and margins. This is no easy task given the number of sales channels and products and the need to localize assortments. Doing this without a proper merchandise assortment planning solution is taking a big risk.

Although it is possible for individual departments within a store to manually plan their merchandising assortment, the cross-category optimization facilitated by merchandise assortment planning software avoids the cannibalization of other departments and results in optimized sales across a store in general.

Furthermore, merchandise assortment planning software allows retailers to make store clustering and localization decisions that will distinguish them from their competitors, increase profit margins and keep valuable customers loyal to their brand.

Choosing the Right Merchandise Assortment Planning Tool

One of the most important considerations when choosing a merchandise assortment planning solution is the software's integration with other departments - for example, buyers will want the selected range to be innovative and attractive to customers, while merchandisers will want the solution to achieve a high level of sales and margins.

Merchandise assortment planning tools should also be sufficiently versatile to allow buyers and merchandisers to measure the effectiveness of their ranges against original budgets, and make adjustments to the merchandising plans to meet the financial objectives defined during the financial planning process.

By highlighting specific issues such as potential stockouts or over stock situations, the right merchandise assortment planning tools will direct users to either approve additional purchase orders or commence a markdown process so that an appropriate level of stock is always in the right place at the right time to meet product demand.

A Case Study in Merchandising Assortment Planning – Kathmandu

Challenge:

Kathmandu is a leading outdoor and adventure brand in New Zealand, Australia and the UK with 160 stores and a growing eCommerce business offering apparel and outdoor equipment. Kathmandu was challenged by a legacy forecasting and planning platform which wasn’t meeting expectations and was beginning to constrain the company’s growth.

Kathmandu was using a legacy platform for their planning and forecasting which relied heavily on the use of Excel spreadsheets and lacked necessary functionality.

Solution:

“We knew we needed to find a platform that could take us on a journey towards an integrated solution across merchandise planning into allocations and replenishment, and one that could address our multi-channel business,” said Caleb Nicolson, General Manager Supply Chain, Kathmandu.

The company selected JustEnough Assortment and Item Planning, and following the successful implementation of this solution, decided to replace additional spreadsheet-based processes with JustEnough Demand Forecasting, Inventory Planning and Replenishment.

“With store formats ranging from 200 square meters to 1200 square meters, we introduced a structured store grade and assortment range planning process. This process was largely executed in Excel, and while it delivered value, it did not enable the flexibility we required and was far from best practice. We needed a solution that would allow us to plan at an aggregate level and then execute at a low level at a later point in time and were confident that JustEnough could provide this functionality,” said Nicolson.

  • Reduced stock in stores by an average of 10%
  • Improved pre-clearance inventory sell-through
  • Increased stock turns
  • Improved cash flow
  • Reduced stock-outs

JustEnough’s Merchandise Assortment Planning Solution

JustEnough's Merchandise Assortment Planning solution is a flexible analysis and planning tool which creates sales forecasts based on past performance, and then allows the results to be adjusted according to expected productivity on a store-by-store basis - based on planners’ past experiences, weighted revenues and margin objectives.

The primary features of JustEnough's Merchandise Assortment Planning solution are:

  • Store Clustering: Enables planners to group stores based on combinations of plan, store attributes and past performance in order that they can more effectively align plans and assortments with the preferences of customers.
  • Assortment Framework: Gives planners the opportunity to define the number of options they wish to include in their planning criteria to adjust the width and depth of department within the assortment.
  • Localized Assortments: Provides additional versatility to adjust results from the merchandise assortment planning software to account for localized variations and to build out the assortment plan to allow for rollup and comparison to financial plans.
  • Item Planning/Item WSSI: Allows retailers to use the data from the Weekly Sales and Stock Intake (WSSI) to make informed decisions about the trend of sales to plan. This feature is essential to avoid stockout or over stock situations.
  • Review Assortment Rollup: Delivers results relating to purchasing, sales, revenues and margins for each product in the assortment. These results can then be aggregated in order to assess performance across product and location hierarchies.

Additional Benefits of JustEnough’s Merchandise Assortment Planning Software

JustEnough’s Merchandise Assortment Planning solution is available OnSite and OnCloud, and its features can help your business to:

  • Increase brand loyalty and attract new customers
  • Use these personas to get the right assortment in front of the right customers
  • Plan the optimum distribution of stock
  • Develop buying personas based on locations, demographics and interests
  • Avoid potential stockouts or over stock situations

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