5 Assortment Planning Terms All Retail RDs Should Know

5 Assortment Planning Terms All Retail RDs Should Know

October 19, 2016
Amanda Rubizhevsky
Retail Industry Insights

As you meet with merchants, buyers and other retail colleagues, assortment planning may be a topic of discussion, especially at key times of the year. Understanding product assortment will help you more effectively provide input on healthier options that are sure to engage your shoppers and how they should be presented in the store.  Today, five terms related to product assortment that will help you appreciate more about the inner workings of your store are featured.  

Assortment Planning: the process to determine which individual products and how many of them should be carried in a merchandise category. It’s a trade-off between the breadth and depth of products that a retailer desires to carry. Questions to consider:

  • Which SKUs drive sales?
  • What criteria should be used for adding or removing items?
  • Are there missed opportunities by not carrying certain items?
  • Which items represent variety, not duplication?
  • Which items are critical to consumer loyalty or image?

Product Assortment: The collection of goods that a business provides to consumers; can be thought of as the number of SKUs within a merchandise category, group or department. Variables include: price level, flavors, size of containers/ packages, colors, type, end use, brand, core (staples, consistent demand or seasonality). Buyers must translate customer needs and wants into actual products, focusing on product features that are going to provide value to the customer, as well as reflect the image of the company. 

Stock Keeping Unit or SKU: A stock keeping unit is a product and service identification code, often a machine-readable bar code that helps track items for inventory at a specific store. In addition to tracking inventory, SKUs can help identify shrinkage, replenish inventory, and identify profits. 

Planogram or POG: a diagram that shows how and where specific products should be placed on shelves or displays, with the goal of increasing customer purchases.  POGs are developed based on thousands of details about products, shopper habits, retail price markup, seasonality, etc.  Often, agreements between retailers and distributors or manufacturers specify details on how products are to be displayed.

Product Range:  Total product offerings expressed by width and depth.

  • Width: variety/ number of types of product category
  • Depth: amount of choices and brand varieties offered within a product category: think cereal or tomato sauce, both considered deep.