In the retail industry, two essential processes play a vital role in helping businesses make informed decisions about their product offerings: Assortment Planning and Merchandise Planning. Although the terms are often used interchangeably, they serve unique purposes and have different objectives. In this blog, we will explore the differences between Assortment Planning vs Merchandise Planning, shedding light on how each contributes to a successful retail strategy. Understanding these distinctions can help retailers optimize their approach and enhance overall performance.
Assortment Planning: What is it?
Assortment Planning process is selecting the right products to sell in a store or online platform. It involves analyzing customer demand, market trends, and sales data to determine the optimal mix of products to offer. Assortment Planning aims to create a curated selection of products that cater to the target audience’s needs and preferences.
Key Objectives of Assortment Planning
- Product selection: Choosing the right products to sell.
- Category management: Managing product categories to ensure a balanced and relevant offering.
- Space allocation: Allocating shelf space and online real estate to different products.
Assortment Planning Process
- Data analysis: Analyze sales data, customer feedback, and market trends.
- Product selection: Choose products that meet customer needs and align with business goals.
- Category management: Organize products into categories and sub-categories.
- Assortment optimization: Continuously review and adjust the assortment to ensure it remains relevant.
Merchandise Planning: What is it?
Merchandise Planning process is determining the quantity of each product to purchase or produce, based on sales forecasts and inventory levels. It involves analyzing historical sales data, seasonal trends, and market conditions to predict future demand. The goal of Merchandise Planning is to ensure that the right quantities of products are available to meet customer demand.
Key Objectives of Merchandise Planning
- Inventory management: Managing inventory levels to minimize stockouts and overstocking.
- Quantity allocation: Allocating quantities of each product to different stores or online platforms.
- Supply chain optimization: Coordinating with suppliers to ensure timely delivery of products.
Merchandise Planning Process
- Sales forecasting: Predict future sales based on historical data and market trends.
- Inventory analysis: Analyze current inventory levels and adjust quantities accordingly.
- Quantity allocation: Allocate quantities of each product to different stores or online platforms.
- Supply chain coordination: Coordinate with suppliers to ensure timely delivery of products.
Assortment Planning vs Merchandise Planning– How They Differ
- Focus: Assortment Planning focuses on product selection, while Merchandise Planning focuses on quantity allocation.
- Objective: Assortment Planning aims to create a relevant product offering, while Merchandise Planning aims to optimize inventory levels.
- Process: Assortment Planning involves product selection and category management, while Merchandise Planning involves sales forecasting and inventory analysis.
Why Both Assortment Planning and Merchandise Planning are Crucial:
- Improved customer satisfaction: By offering relevant products and having them in stock, retailers can improve customer satisfaction.
- Increased sales: A well-planned assortment and optimized inventory levels can lead to increased sales and revenue.
- Reduced waste: Effective Merchandise Planning can help reduce waste and minimize stockouts and overstocking.
Conclusion
While the debate of Assortment Planning vs Merchandise Planning will always persist, it’s important to recognize that these are two distinct processes that work in tandem to help retailers develop a successful product strategy. By understanding the differences between these two approaches and the various stages of merchandise planning, retailers can make informed decisions about their product offerings and inventory levels, ultimately driving business success.
