Assortment or Range planning is the majority of a buying and merchandising team’s purpose. All of the other work done is related to building the range for the next phase, the next season, the next year.
From strategy to trading, from WSSI to supplier relationships, from competitor shopping to catwalks – it’s all ultimately about getting the right range in the right quantity at the right price to the right place.
So why do so many Assortment Planning implementations fail?
All Range Planning is not created equal
In order to be able to select an appropriate system it’s vital to understand that not all range planning is equal.
For areas that have a great deal of consistency of range for long periods of time such as Food, Beauty, Perfume, some Home areas, etc, the range build is more focused on which stores the line should be in, how to balance stock availability with cashflow, what regularity of intake is needed, where history surfaces recommendations to expand or contract the line or the sizes.
It is much more about Like-for-Like planning and therefore AI/algorithm-based tools can be extremely useful.
But for an area that is much more volatile, like Fashion, the same tool will not apply, there are far too many unknowns and therefore planning considerations would be different
You would start in the same way and look at last year best sellers and continuity lines, then address any stock outages, expand or contract store numbers, and review the E-comm specifics to provide a strong base.
And you would then be using an Option Framework to start from an average, looking at how many options you need to fill the space, provide sufficient newness, deliver the sales plan, etc. However, considering other variables such as trend or the competition, cannot be fullt managed or calculated via a system.
These are different tools for different purposes so the first thing that can go wrong is simply selecting a tool that is not aligned to your business model/s.
Not all Range Planning is equal… So how do you ensure you select the right tool for the job?
Ensuring you have the right system for your business starts with answering the question of: what do you want the system to do?
Retailers are usually looking for systems to deliver changes to how the business operates and to deliver benefit by increasing sales/profit and/or reducing costs.
One of the biggest reasons for failure of Assortment Planning (AP) systems implementation is lack of clarity on scope and process before you start.
To give yourself the best possible chance of a successful transformation project, there are 5 key areas that you need to consider before you start:
- Understanding the business need
- Ensuring stakeholder alignment
- Understanding your users
- Having well-structured data
- Agreeing on scope
1. Understanding the business need
Retailers routinely expect the software provider to arrive with a process recommendation which is a good fit for their business. Yet the retailer has very often not defined and agreed with stakeholders what that would actually look like.
For example, it’s very common for us to be given the brief of supporting the creation of a global range. But very rarely has anyone gotten under the skin of that aspiration in order to understand the business and context in enough detail:
- What sells in your different regions and channels?
- How much commonality of product is there?
- If differential ranges are required on top of a core, how will you identify the right product?
- How is your organisation structured?
- How much co-operation is there today – either across B&M, or across regions and channels?
- Where will accountability and ownership lie? Is that different for different segments of the range?
- What are the risks as well as the opportunities of behaving globally?
All of these questions and more need answering to a level, ideally before system selection. You need to know that it will support your desired way of working and be very clear on the compromises you may need to make.
Because range planning is so complex and at the heart of who your business is, “vanilla” will very rarely be sufficient.
2. Stakeholder alignment
The business stakeholders must be aligned, not on the details, but on the principles.
To continue the global example, if you had multiple Commercial Directors or General Managers each leading a region – each building ranges autonomously, each with sizeable teams – it is easy to see the cost reduction benefit of being global, but each of those CDs/GMs are likely to react differently.
If you do not align these stakeholders at this stage and deal with any opposition, build out the vision for them and their teams (as well as company level), you are likely to waste vast sums of money on systems and development that will not land.
You will tie your project team up in politics rather than focusing them on system development.
For some Exec committees it is incredibly hard to align and/or deal with opposition, but without it you should not be buying a system. You’re just not ready yet. So, some pragmatic tool development and some interim process changes might be a better plan.
3. Understanding your users
Users should always be involved in the design of any system, but for Assortment Planning, it is absolutely critical. It is such a central activity for the buyers and merchandisers that they have to be at the heart of the design.
System interaction is usually not too much of a challenge for those on the merchandising side of the table. They enjoy the analytics and the order, and systems are there to make their roles simpler and more productive.
But few Buyers went into the profession to spend time on their screens. They most often want to be working with the product, negotiating with suppliers, looking at competitors and forward influences.
It is quite common for Buyers to be included in system design sessions. But just as commonly, they will lose interest and stop coming to those sessions long before design is complete. And that’s partly because design goes on too long because the process required has not already been agreed.
How and when you engage Buying teams – and utilising their input effectively – is important to building a successful tool.
Who, what, when and how will the system be used?
It is just as important to think about who, which role, as well as which function will do each step in the tool.
If your AP design rests on senior buyers or buyers inputting extensive data into a rigid tool there will be a problem with adoption and your benefits case needs a review – you are asking one of your most expensive people to be focused on admin!
Again, in certain product categories that might make sense, but in an area like Fashion, is that really what you want the most creative person on the team focused on, data entry?
To be clear, it makes sense systemically for the person closest to the product to input data, from a data flow point of view it’s great, just not in the real world.
4. (Well-structured) Data
Many retailers, especially those who feel their range planning could be improved, have poorly
organised data which is hard to access. Still more look at line-level and company-level only, completely missing the richness of patterns that can only be seen in the mid layer, the groupings of like product by hierarchy or attribute – dress types, colour etc.
This is where you understand customer demand. And if you have customer insight, you understand what’s driving that behaviour.
Without well organised data you’re relying on your B&M teams gut feelings – which may be good enough for your most talented employees but is unlikely good enough at the average.
If you haven’t got this data lined up and ship shape ahead of starting an AP project, you are going to burn through time and money getting it whilst your software partner is waiting for it. This usually leads to a rush to get the system over the line – which means it is unlikely to be as good a fit for your teams as you need it, and you risk rejection.
5. Project Scope
Understanding the scope of range planning is also crucial.
- Where does range planning begin? – Is it with space? Grading and clustering? Option Framework?
- Where does it end? Is it with the phase/season/half ready-to-go? Item create? E-comm item enrichment? Order raising? Allocations out to the grades and clusters? Is it with maintaining performance record?
All too often Range Planning is a secondary thought in Assortment Planning design, and all the other connected needs and outputs become the focus.
For an Assortment Planning system to truly deliver, its focus must be the range construction. As part of a programme of work the inputs and outputs to AP can be utilised in other processes and though there can be some influence, scope needs to be contained.
The future of Assortment Planning implementations
Assortment planning systems are developing all the time, becoming less rigid, more aligned with how B&M teams work, and attuned to the reality that ranges develop over time.
As technology improves and the tools become more visual, AP systems are becoming more useable by both Buying and Merchandising, more of a middle ground between creative and analytical.
Systems are beginning to be capable of much more detailed analysis than people have the time for, really delving into the minutia of the history to provide increasingly robust and nuanced recommendations, the ability to cluster for customer segments.
There is more understanding that a Range/Assortment Plan is much more than the connection between a WSSI and Item Create/Purchase Order.
Planning is always about capability, and systems which support capability building will be the ones that are most likely to land.
If you’re looking for a partner to improve your Assortment Planning processes and/or systems, we’d love to help. We’ve got a highly experienced team that’s worked on hundreds of projects for retailers across the globe.