What is Merchandise Range Planning?
Merchandise range planning is part of the overall assortment planning process and involves making decisions about the amount of merchandise choice - the variety (or breadth) and the depth – that will be available to customers. The breadth of stock is the number of different types of merchandise and the depth of merchandise is defined as the number of SKU’s per type.
Determining the right merchandise range is critical to meeting financial targets and satisfying customers. If the variety or amount of product aren’t what the customer needs or what the customer expects from the retail brand, the retailer will likely lose the sale and possibly the customer.
It’s a careful balancing act as overstocking merchandise will result in lower inventory turnover and reduced profits while understocking may result in lost sales and unhappy customers who take their business elsewhere.
In attempting to determine the ideal breadth and depth for a category, buyers should consider factors including:
- Profitability of the merchandise mix
- Corporate philosophy toward the assortment (broad and shallow or narrow and deep)
- Physical characteristics of the stores or layout of the eCommerce site
- Service level targets
- Complementary merchandise
The ideal merchandise range plan results in the right merchandise, in the right quantity, at the right price and at the right time.