AssortmentPlanning FullReport PAG Research PDF

retail consulting and industry thought leadership
Unraveling the Mysteries of Assortment Planning

– Research Study
Presented by:
The Parker Avery Institute
the education, training and research unit of The Parker Avery Group
Research Study: Unraveling the Mysteries of Assortment Planning | 1
There seems to be a certain

“mystery”
about Assortment Planning.
We have seen many different facets of this mystery during conversations within the halls of retail
corporate offices and in trying to decode the many perspectives and documentation from other
consultants and merchandising solution providers.
The Parker Avery Group wanted to unravel some of this mystery and shed light on current Assortment
Planning practices and objectives, including what elements are most important to retailers, the challenges
that exist and plans or considerations for the near future.
Before embarking on this undertaking, we had several hypotheses, some of which turned out to be ill
founded:
! There are numerous definitions across the retail landscape of what exactly is Assortment
Planning and how it is used.
! While many retailers understand and may employ some Assortment Planning concepts, fewer
retailers actually conduct end-to-end Assortment Planning activities.
! Despite vast differences in approaches, we have seen some common traits, such as breadth,
depth, price points, attributes (product and location), demographics and more.
! Assortment Planning software solutions are making headway in adoption and are beginning to
satisfy the needs of some retailers.
In this research study, Parker Avery takes a deeper dive into Assortment Planning. We explore retailers’
objectives and challenges, as well as how they are handling supporting technologies and managing
organizational responsibility. We developed twenty questions focused on Assortment Planning and
targeted planning and merchandising professionals to participate in the study. During the months of July
1
and August 2015, more than sixty participants, representing all retail segments , provided a wealth of
information and insights about their own Assortment Planning environments.
In addition to the survey findings, Parker Avery offers our own insights on how to best approach your
Assortment Planning challenges to meet your strategic objectives.
1
Detailed participant demographics can be found in the Appendix.
Copyright © The Parker Avery Group. All rights reserved. be selective.

Contents
The Importance of Assortment Planning ..................................................................................................... 3!
The Great Divide .......................................................................................................................................... 4!
Assortment Planning Objectives .................................................................................................................. 5!
Top Challenges ............................................................................................................................................ 6!
Other Significant Challenges ....................................................................................................................... 8!
Getting into the Details ................................................................................................................................ 9!
The Ideal Solution ...................................................................................................................................... 12!
Final Word.................................................................................................................................................. 13
Appendix: Detailed Survey Responses ..................................................................................................... 14!
Appendix: Survey Respondent Demographics .......................................................................................... 19!
www.ParkerAvery.com be selective.
The Importance of Assortment Planning

Why is Assortment Planning so important? Why does this area of retailing really matter – especially in
today’s fast-paced, ever-changing retail landscape, and why is it so relevant to many retailers? The
answers lie with what should be every retailer’s ultimate focus: the end consumer – indeed, a proven
strategy.
Steve Jobs, Apple Inc.’s late co-founder, chairman and chief executive officer, is widely considered to be
one of this century’s greatest innovators and iconic public figures. Jobs recognized that customer desires
must be the starting point for the development of any new product, not the technical specifications or
underlying technology of the gadget. This approach made a significant difference in how the product
would ultimately be accepted by the end consumer. Of course, all of Apple’s products had to have the
appropriate level of “geek credentials,” but they first and foremost had to be desirable to a segment of
consumers. In some cases, Jobs intuited those desires before consumers knew exactly what they
wanted.
The same logic holds true for Assortment Planning. Retailers want to ensure they have the right
products, in the right locations and in the right quantities for their customers. They may lead with
something more fashion forward or more basic, but it is imperative to start with an intimate understanding
of the correct target audience, the consumer.
This is not really a new idea, but the expectations and the capabilities have come a long way. Before the
advent of the computer age, the early pioneers of modern retailing like Sears, JCPenney and other mass
merchants had an assortment – often only one – that worked for all stores, as well as their catalogs
(perhaps with some minor modifications). Over 100 years ago, these assortments included women’s,
men’s and children’s clothes, as well as guns, stoves, furniture, surreys and even house plans. It is
curious to consider: Was planning the assortment more difficult back then, or simpler?
Without a doubt, to those early retailers, the assortment was as important then as it is now. But the
requirements to define the assortment were much more basic, since typical customers had less
information about all of the products available in the marketplace, and there were simply fewer choices.
Also, the technology needed to perform advanced planning methods to develop the assortment was
certainly not yet in place.
Everything, as always in retail, is dependent on “the product.” Regardless of new technology, store
development plans, allocation, fulfillment and marketing, if the assortment does not match your target
consumers’ needs, even the most advanced efforts may be rendered fruitless.

The Great Divide

It often seems that when retailers discuss Assortment Planning, they are speaking different languages.
Based on our many conversations and observations with clients and other retailers, Parker Avery
believes this is due to a combination of factors:
• Assortment Planning needs are very different based on the number and type of sales
outlets. A retailer with a single store will still have to determine the assortment, but will not have
to worry about the variants that having multiple stores and a website requires.
• Intensity of Assortment Planning activities depends on the amount of “newness.” The less
change in the line from season to season, the less the need for sophisticated Assortment
Planning approaches.
• Responsibility crosses organizational groups. Assortment Planning straddles the traditional
responsibilities of buying and planning organizations (albeit typically heavier on the buying side).
Elements of Assortment Planning that are characteristic of one organization may not be
recognized or valued by the other.
• In space-intensive categories, Space Planning trumps Assortment Planning. Whether
managing hard goods housed on a supermarket shelf or furniture on showroom floor, businesses
with hard space constraints tend to manage their assortments using space planning methods
rather than Assortment Planning approaches.
• Assortment Planning software is only now reaching the of level of sophistication and
flexibility to truly support the activity. This is despite the fact that software providers have
talked about Assortment Planning for a decade or more. Widespread use of Assortment Planning
solutions will drive increased commonality in the definition of Assortment Planning across the
industry.
We considered providing an upfront definition of Assortment Planning to level-set this study, however the
decided variability of the practices currently in place made it difficult to derive. Let us instead look at the
main objectives of Assortment Planning as ranked by our study respondents and see what definitions
emerge from their responses.
Assortment Planning Objectives

For more than half of the retailers in our study, the top objectives of Assortment Planning included: (1)
developing different assortments by cluster and (2) developing different assortments by channel
2
(e.g. stores, catalog, online). These responses drive to an important element of any definition of
Assortment Planning: the practice of developing different assortments for targeted groups of customers.
These top two objectives were followed closely by (3) quantifying sales at the style / color level (also
with more than 50% of respondents), (4) planning sales by product attribute (such as color, fabric or
brand), and (5) quantifying purchases or receipts at the style / color level.
This suggests a second critical
over half!
element of a definition of
Assortment Planning: the
top objectives
development of item, attribute, or
identiﬁed(these(as(!
assortment-level financial targets
for a specified period of time.
These targets are most widely
expressed in terms of sales and / 1.  develop different assortments by cluster (57.4%)
or receipts.
2.  develop different assortments by channel (54.1%)
Additionally, roughly a third of
participants included the following 3.  quantify sales at the style / color level (52.5%)
as top objectives:
• Quantify purchases or receipts by vendor

• Provide development direction to design and production / sourcing teams
• Quantify sales by vendor
• Drive purchasing execution (e.g., auto purchase order creation)
• Quantify sales at the size / SKU level
• Match assortments to display space
These demonstrate one of the fundamental challenges with Assortment Planning: retailers strive
to achieve a vast number of different goals with this capability.
Close to 10% of retailers responded, “We don’t do Assortment Planning.” We found this number to be
both low and encouraging. Not all retailers benefit from Assortment Planning, for example those with a
single store, a single website or a very limited, focused product offering. Given this, the fact that so few
respondents eschew Assortment Planning shows how valuable the practice is considered to be.
2
Detailed survey responses can be found in the Appendix.

Top Challenges
When it comes to Assortment Planning challenges, our retailers considered two issues to be standouts:
(1) inadequate software or tools (missing capabilities or manual processes required) and (2) lack of
integration (Assortment Planning was a stand-alone process, not systemically tied to item creation or
purchasing). These two issues
were almost equal in significance, top$
significant challenges$
with 55% and 53% of respondents
respectively branding them a
“significant challenge.” Roughly
Inadequate
80% of respondents agreed that software / tools 55% 31% 15%
these represented some level of Lack of

53% 33% 15% Significant
challenge. These responses and integration
Challenge
responses to a number of our Insufficient

31% 47% 22% Somewhat of a
resources / skillsets Challenge
other questions about Assortment
Lack of data / Not a Challenge
Planning tools highlight some data integrity is poor 24% 40% 36%
interesting conundrums. Management

support 18% 49% 33%
For example, in a separate

question we asked respondents to indicate the tools / solutions currently used for Assortment Planning.
From our experience prior to starting this research, we believed spreadsheets were widely utilized. But it
came as a surprise that a strong majority – roughly 71% – of retailers in our study use spreadsheets for at
least some aspect of Assortment Planning. To be fair, spreadsheets were sometimes coupled with
another solution, but this was still a higher proportion than we expected. Custom developed applications
were cited as the next most widely used (38.5%). It seems that while most retailers are using a
combination of tools, this mixture
frequently does not involve a
over 70%
commercial software solution.
Once we looked beyond in-house

use spreadsheets
or custom software, there was no
dominant solution vendor named. $

SAS, JDA and Oracle all had
about the same penetration,
for(assortment(planning$
between 7 and 8%, followed by
custom developed applications

minor representation of a dozen
other companies. This also came
as a bit of a surprise, as some of are(another(popular(tool $
these prominent retail software
providers have had solutions
available for a decade or more. Given this longevity in the marketplace, we expected the industry leaders
to exhibit more market penetration in this critical functionality.
The results when the panel was asked about clustering were similar. Fully 42% of respondents answered
that they performed clustering for Assortment Planning using spreadsheets as their tool. This was
followed by 21% that use their Assortment Planning tool and 12% that use a commercial clustering tool.
Given the complex nature of the calculations required for meaningful clustering, the reliance on
spreadsheets for this functionality was even more unexpected. (Clustering is discussed in more detail in
a subsequent section of this study.)
These findings beg the questions: Do retailers overwhelmingly utilize spreadsheets for Assortment
Planning because they lack maturity in the discipline, or does this indicate a shortcoming in the product
offering of the software provider community? The relative prevalence of custom developed applications
would seem to indicate dissatisfaction with commercially available solutions.
On the other hand, we asked our panel the following question: If you are considering implementing a
new Assortment Planning solution, where are you in the process? 7% of respondents are either
currently implementing a new solution or have selected a solution and are implementing it within the year.
Another 29% are either currently evaluating solutions or are planning to do so within the next year. While
there is no indicator in the
37%
question about whether the
selected or evaluated solutions
are custom developed or have no'plans'to implement a new solution
commercial software, it is
reasonable to expect that
but'+ some stage
58%
packaged software will at least be
are in
a candidate for consideration.
This may indicate that retailers are of planning
or
becoming more interested in the
capabilities of third-party software, implementation+
at least as an option.
Meanwhile, 37% of respondents

have no plans to implement a new Assortment Planning solution. Given the inferred level of unhappiness
with current available solutions, this may reflect a lack of recognition and support among senior
executives of the importance of Assortment Planning to the bottom line.
It comes as no surprise, given the prevalence of spreadsheet use and custom solutions, that lack of
integration was the second ranking challenge, with 53% of respondents ranking it a significant challenge.
These methods for creating Assortment Planning tools are notorious for their isolation from upstream and
downstream solutions – not tied to either item creation on one side, or purchase order (PO) creation on
the other. Improvements in
integration, either through the
retailers
are)!
slowly!
development of mechanisms to
working)towards)!
integration
transfer data between current
solutions or their replacement with !
newer tools, promise to improve no plans to
integrate 29%
efficiency, reduce errors and 44% 44% 44% No integration
58% plans
ultimately improve profitability.
planning 27%
Not integrated
integration 27% (but planning to)
Underpinning the integration 38% 40%
23%
challenge were responses about 44% Currently
currently 29% Integrated
current and planned integration 19% 17% 19%
integrated
with other systems. We MFP PO creation Demand Item creation / Space planning
forecasting PLM
specifically asked about current
and planned integration with
merchandise financial planning (MFP), purchase order (PO) creation, demand forecasting, item creation /
product lifecycle management (PLM) and space planning, and we found that the combination of “no
integration,” or “not integrated but planning to,” beat responses for “currently integrated” on all systems.

Also, some of the respondents’ comments pointed out several areas where they had attempted to
integrate the process, but without the solution integration this was ineffective – again highlighting the
difficulty of merging systems and data that are often ill defined or incomplete. Topping the list of solutions
currently integrated with Assortment Planning was merchandise financial planning (MFP) with 44% of
respondents citing integration.
If anything is extraordinary here, it is that over half of respondents’ Assortment Planning solutions
are not integrated, and yet many of these retailers seemingly have no plans to integrate with
forecasting, product lifecycle management (PLM), purchase order (PO) creation or space planning
systems, and more significantly, integration is cited as the second most critical challenge. Another
potential factor in lack of plans for integration is that a number of retailers are in the process of core
merchandising system replacements or upgrades, thus they are focused on foundational elements, with
further integration to come later. Moreover, the lack of integration further escalates challenges with data
and solution adequacy mentioned earlier.
There is good news, however, regarding integration in the solution front: we have begun to see an
emerging trend in Assortment Planning and product lifecycle management (PLM) software integration
points, as well as Assortment Planning solutions that have a much more integrated approach to analysis
within the tools.
Other Significant Challenges

Following closely on the heels of tools and integration, respondents cited resources and skillset as the
next most prevalent challenge, meaning the organizations simply do not have the people, bandwidth or
expertise to effectively execute the complex Assortment Planning task. This may be partly due to the
roles within the organization tasked with Assortment Planning.
In a separate question, we asked which group within our participants’ companies was responsible for
Assortment Planning; 59% said the merchandising / buying organization perform this set of tasks,
while 28% of respondents said the planning organization held the responsibility. Given the
multiplicity of other responsibilities on a buyer’s plate,
it is no wonder that insufficient resources are available
for Assortment Planning. Also, we have observed in
many organizations, the skills required to be a
Assortment Planning
successful buyer do not necessarily match those
required to be a top notch assortment planner, leading
requires merchant /
to a perceived gap in expertise. planner collaboration
We have also seen many retailers that rely on the
planning organization to drive Assortment Planning
because it truly blends
skimp on the number of resources dedicated to the
task. This is typically because Assortment Planning is
the art and science of
added to the portfolio of responsibilities once merchandising
merchandise financial planning is firmly established.
In this scenario, assortment planners are viewed as
“incremental headcount,” for which it is often difficult to secure funding. It is also devilishly complicated to
estimate the number of assortment planners required by an organization in the abstract, so the typical
strategy is to start with a small organization and expand when required.
Besides bandwidth, a more subtle dynamic may be at play. Effective Assortment Planning requires a
high level of collaboration between buyers and planners. Yet many companies have a more
compartmentalized approach that does not encourage these two groups to work closely together. A lack
of partnership can both increase workload on the role performing Assortment Planning and promote the
perception that work is not being accomplished efficiently. In fact, a number of responses stressed the
shared nature of the activity – in some instances including product design as well. This also highlights
the opportunity and another key challenge with Assortment Planning. The process requires merchant /
planner collaboration because it truly blends the art and science of merchandising. Done well, it presents
a competitive advantage, but done half-heartedly, or with an unbalanced focus, it will wreak havoc with
margins, turns and profitability.
Further down the list of challenges, but no less important in our opinion, was a lack of data and / or data
integrity and leadership / management that does not visibly understand or support Assortment
Planning capabilities. While these were cited as significant challenges in only 24% and 18% of our
respondents, respectively, over 60% identified both as some level of a challenge to effective Assortment
Planning. It goes without saying that the downstream impacts of insufficient and “bad” data can result in
inefficient processes, poor decisions and – ultimately – an ineffective Assortment Plan that does not meet
consumer needs or strategic objectives. There is also a logical tie-in to the above challenge of
inadequate systems – it is difficult to import and generate good data from spreadsheets and varied,
customized systems.
Likewise, management support and understanding of the skillsets, resources and investments required to
effectively plan assortments is critical. With proper support from the C-suite and leadership, many of the
other challenges could be greatly mitigated.
Getting into the Details

To better understand specifics on how retailers are performing Assortment Planning, we took a deeper
dive into the following areas: time frames, use of clusters, other types of planning performed, relationship
with merchandise financial planning (MFP) and how different product types are handled within
Assortment Planning.
TIME FRAMES
assortment) Season
Assortment Planning is mostly done by planning) 44%
season, but there is a good amount of
variability, dependent upon factors such
as the type of retailer and lead times. time Promotion /
Special
Quarter
17%
frames
Event
Many retailers have major seasons, and
may also have smaller seasons within
) 2% Year 4% Mini-
Other Season /
those; so planning is often a mix of time 5% Month Collection
frames. Lead time variations for different 13% 15%
products may also influence Assortment

Planning timing. For example, longer lead time products like imports will typically be planned by season
or quarter, while short lead time categories like juniors or contemporary may create one to two month
plans, as their markets allow for selection due to the nature of trends and “fast fashion.”

The predominance of seasonal Assortment Planning may be driven as much by capacity as by the nature
of the underlying business. The creation of an assortment plan is an involved and sometimes arduous
task that may be too onerous for a buying or planning organization to undertake with greater frequency.
USE OF CLUSTERS
One of the most important – and challenging – areas within the holistic Assortment Planning process is
clustering. In simple terms, clustering means “The process of grouping sales outlets together based on
similarities or patterns in underlying customers’ behavior.” These similarities are most often gleaned from
data related to historic or forecasted sales,
or information that is descriptive of the
customers or the store. Examples of the
latter include demographic or climatic
use$of'
CLUSTERS
not using but
information. currently do plan to use
using 18%
An ideal state of Assortment Planning
would allow the targeting of an assortment
in' assortment clusters not using and
to each customer, based on individual planning 63% no plans to

use
preferences. However, this state of retail 19%

nirvana is typically extremely difficult to
even come close to.
Just under two thirds of respondents use clusters, with the remaining balance split evenly between
planning the use of clusters and not using clusters. This finding certainly holds merit, as clustering simply
may not make sense to all retailers. For those with limited stores, or non-traditional business models,
such as a television direct marketer or pure play web retailer, clustering would not likely be a priority.
Futhermore, some respondents do not have systems that support clustering, despite the desire to have
this capability.
Q: how
cluster ?"
We took an even deeper dive into
clustering, as this is another area of
"do%most%retailers"
mystery for many retailers, yet holds great
opportunities for becoming more focused ✓
5 to 10 clusters
in Assortment Planning. For those
retailers who do cluster, 42% use ✓
seasonally
spreadsheets, representing by far the
dominant clustering tool in use; this was ✓
spreadsheet or%assortment%planning%solution%"
followed by just over 21% of retailers who
leverage the existing clustering ✓
sales $ / units, store size, demographics
capabilities within their Assortment
rd
Planning solutions. An interesting comment added by one respondent was use of a 3 party service
provider which assorts by location.
Top clustering factors include: sales dollars and units, store size (or space) and demographics (which
might include attributes such as income level or ethnicity). Other factors include gross margin and
customer / CRM data. Another factor cited was climate which is typically a popular attribute used. Five to
ten clusters is most widely prevalent – this finding was consistent regardless of number of stores.
Otherwise the number of clusters in use represents a fairly standard bell curve. Most retailers update
their clusters seasonally, followed by quarterly. The question herein would be – is this frequency
enough? And while we did not ask how often tweaks and refinements are made, Parker Avery advises
that this be performed on a fairly regular interval to accommodate the fast-paced environment and
changing landscape that encompasses retail.
For more information about the topic of clustering, we invite you to read Parker Avery’s point of view,
“Retail Clustering Methods: Achieving Success with Assortment Planning.”
RELATIONSHIP WITH MERCHANDISE FINANCIAL PLANNING AND OTHER TYPES OF PLANNING
When asked about the linkage with merchandise financial planning (MFP), a close majority (53%)
indicated it was an iterative process, with the remainder saying that merchandise financial
planning precedes and drives
Assortment Planning (26%) or they are in'
separate, non-integrated processes
(18%). Nearly three-quarters of the 64%
of*retailers'
Iterative
process,
driven by MFP
“iterative” group indicated that
merchandise financial planning drove the
merchandise MFP precedes 38%
process, while the remainder financial and drives the
AP process Iterative
acknowledged Assortment Planning planning
! 26% process,
driven by AP
precedes merchandise financial planning. drives' Separate and
15%
assortment
non-integrated
processes
Most of our study participants (82%) have
planning 18%
Other
3%
a merchandise financial planning process,
about half perform item planning, and less
most merchandise financial planning

than half perform location or space
perform'
planning. This is not a surprise given the
breadth of retail segments represented. !
half+or+fewer+do' item, location

A small number of study respondents and space
stated they do not perform Assortment planning
Planning. Of these, over half (57%) do
81.8%
both merchandise financial planning and
50.9% 43.6% 38.2%
space planning, but only a handful (14%)
of these retailers perform item planning; Merchandise Financial Item Planning Location Planning Space Planning /
none currently do space planning. Planning (MFP) Planogram
ASSORTING DIFFERENT PRODUCT TYPES
We asked how replenishment products,

seasonal products and carry-over
inventory are handled within Assortment nearly half plan%
100%
Planning and found that nearly half (48%)
of(their%
plan their entire assortment of assortment%
products, while just under a quarter
(24%) said they plan new items only. 47.6%
35.7% 33.3%
23.8% 21.4%
Replenishment or basic products are 9.5%
generally included with the Assortment We plan 100% of our Basic replenishment We look at inventory for We plan new Basic replenishment We do not carry
assortment product is considered a carry-over products items only product is an active replenishment
Planning process, but the level of focus "given" - focus is on during our assortment part of the assortment product
fashion / seasonal planning process planning process
can be from minimal to an integral part of product
the overall assortment. Just over a third of

respondents admitted that basic replenishment product is considered as a "given" with the primary focus
being on fashion or seasonal product. One point of view is that it may not take the same amount of time
or effort as new items, but this then begs the question: How is the holistic assortment considered without
including replenishment products? A third of respondents look at inventory for carry-over products.
The Ideal Solution

With an eye to the future, we asked about capabilities desired in the “ideal” Assortment Planning solution.
The majority of our participants identified the following as “very important” capabilities: (1) linkage to
MFP, (2) the ability to begin planning with a conceptual item / placeholder, (3) linkage with PLM
solutions for item creation and (4) linkage to allocation / replenishment. These same capabilities
were deemed of some level of importance (i.e., “very important” or “important”) for over 90% of our
respondents.
Of slightly less importance (but not by much) were:
• Linkage to PO creation
assortment
important ?
• Use of images / pictures what+-
• Use of statistical forecasting planning capabilities+are-
However these capabilities were Linkage with MFP 65% 33% 2%
still considered important to well Ability to begin with a

conceptual item (placeholder) 63% 29% 8%
over three quarters of the retailers Linkage with PLM

(for item creation) 52% 42% 6%
Very Important
in our study. The least important Linkage with allocation /
replenishment 52% 35% 13%
capability was linkage to space Linkage with PO

46% 38% 17% Important
(ability to create a PO from AP)
planning or space / fixture
Use of images / pictures 44% 38% 19%
information, with less than a third Not Important
Use of statistical forecasting 40% 38% 23%
of respondents identifying this as
Linkage with space planning
29% 42%
“very important” but 42% saying it or space / fixture information
29%
is still of some level of importance. very important important not important
For the small number of study respondents who do not perform Assortment Planning, their perspectives
on the importance of certain capabilities were mostly in line with those who do currently plan their
assortments. The key differences were a much stronger level of importance given to linkage with
allocation and replenishment, as well as more importance given to the linkage with space planning, use of
forecasting and use of images. This may be due to these respondents’ lack of experience in performing
Assortment Planning and less understanding of what capabilities are needed to drive effective planning
decisions.
Overall, these findings indicate a clear desire for – and understanding of the importance of – integrated
processes and systems, even if these capabilities are not yet in place. Looking back at the top
challenges, integration will become increasingly critical to drive efficiencies and make the best use of
planning solutions and related supporting technologies.
Final Word
Ultimately, the value of Assortment Planning, when done correctly, will enable retailers to acutely focus
on the objective of aligning product offerings across all channels to the desires of their target consumers.
Retailers must focus on putting the appropriately skilled resources and collaborative environments in
place for successful Assortment Planning decisions that align with consumer needs and deliver sales,
margin and inventory effectiveness. Where tools and solutions are still missing or a weakness, it is
critically necessary to understand specific business requirements, identify the correct solution set that will
enable those capabilities, and perform the requisite system and process integrations to take full
advantage of technology investments.
Without a doubt, Assortment Planning will be a key factor for the success of most retailers. The winning
brands in the next decade will fully develop and execute their planning strategies, integrate Assortment
Planning processes and tools within their enterprise, and ensure it is baked into their overall DNA.
We invite you to read additional Parker Avery publications, which can be found at
http://www.ParkerAvery.com/insights.html.

Appendix: Detailed Survey Responses

ASSORTMENT PLANNING OBJECTIVES
Assortment Planning Objectives
Which of the following are objectives of Assortment Planning at your organization?

Develop different assortments
57.4%
by cluster
Develop different assortments

54.1%
by channel (e.g. stores, catalog, online)
Quantify sales at the

52.5%
style / color level
Plan sales by product attribute

47.5%
(such as color, fabric, brand)
Quantify purchases or receipts

42.6%
at the style / color level

36.1%
by vendor
Provide development direction to

34.4%
design & production / sourcing team
Drive purchasing execution

32.8%
(e.g., auto PO creation)
Quantify salesby vendor 32.8%
Match assortments
31.1%
to display space
Quantify sales at the

31.1%
size / SKU level

24.6%
at the size / SKU level
Quantify sales
21.3%
by customer
Other 6.6%
We don’t do
9.8%
Assortment Planning
TOP CHALLENGES & OTHER SIGNIFICANT CHALLENGES

Assortment Planning Challenges
Please rate the following challenges relative to your Assortment Planning processes.
Inadequate
55% 31% 15%
software / tools
Lack of
53% 33% 15%
integration
Insufficient
31% 47% 22%
resources / skillsets
Lack of data /
24% 40% 36%
data integrity is poor
Management
18% 49% 33%
support
Other 4% 16% 80%
Significant Challenge Somewhat of a Challenge 16% Not a Challenge 80%
Please indicate the degree of integration of your

Assortment Planning process / solution. Select all that apply.
Degree of Assortment Planning Integration
29%
44% 44% 44%
No integration
58% plans
27%
Not integrated
27% (but planning to)
38% 40%
23%
44% Currently
29% Integrated
19% 17% 19%
MFP PO creation Demand Item creation Space

forecasting / PLM planning
If you are considering implementing a new Which group within your company is
Assortment
AssortmentPlanning
Planningsolution,
Solutionwhere
Plans are you responsible for Assortment Planning?
Assortment Planning Responsibility
in the process?
(all respondents)
It is on our two to
three year roadmap
22%
Merchandising /
Buying
We plan on evaluating 59%
solutions within the
next year
17%
No plans to implement We are currently

a new solution evaluating solutions
37% 12%
Planning
28% Other Design
11% 2%
Other We have selected a
5% solution and are
implementing it within
We are currently the year
implementing a new
2%
solution
5%
Assortment
Please indicate Planning
if you actively Tools
utilize one / Solutions
or more Used
of the following
tools / solutions for Assortment Planning. Select all that apply.
Spreadsheets 71%
Commercial
44%
software package
In-house developed
38%
application
Other 6%
No tools currently
4%
in place

GETTING INTO THE DETAILS

Please describe your use of clusters. How oftenfor
Timeframes doesUpdating
your company
Clusters
update clusters?
Quarterly
21%
Yearly
Not using but do 12%
plan to use
18%
Currently using Other
clusters 6%
63% Per Mini-
Not using and no
plans to use Season / Seasonally
19% Collection 52%
6%
Greater than
annually
3%
Factors
What factors are Included
included in Clustering
in your clustering Methodologies
methodology? Select all that apply.
100%
80%
81.3%
60%
62.5%
59.4%
50.0%
40%
20% 25.0%
21.9%
12.5% 12.5%
0%
Sales $ Sales units Store size / Store Gross margin $ Customer / Gross margin Other
other space demographics CRM data rate
measure
Number of Clusters Used

in How
Assortment
many clusters Planning
do you use Which best describes your
Clustering Tools
in Assortment Planning? clustering tool?
5 – 10 Spreadsheets,
42.4% 42.4%
Assortment Planning
Application, 21.2%
11 – 15
21.2%
<5 General Statistical

18.2% >15 Software Package
(e.g. SAS, Minitab,
18.2% Commercial SPSS), 6.1%
Clustering Solution,
12.1%
Custom Developed
Application, 9.1%
Different Method,
9.1%
For what time periods do you most How is the Assortment Planning (AP) process
frequently create an Assortment Plan? linked or related to the Merchandise Financial
Planning (MFP) process in your organization?
Season
44% Iterative process,
Quarter driven by MFP
17% 38%
MFP precedes and

drives the AP
process
Mini-Season /
26%
Collection
Iterative process,
Promotion / 15%
driven by AP
Special Event 15%
2%
Separate and
non-integrated
Year processes
4% Other
Other Month 18%
3%
5% 13%
How Replenishment Products, Seasonal Products and Carry-

Please indicate how replenishment products, seasonal products and carry-over inventory
Over Inventory are Handled within Assortment Planning
are handled within your assortment planning processes. Select all that apply.
60%
40%
47.6%
20%
35.7% 33.3%
23.8% 21.4%
9.5%
0%
We plan 100% of Basic We look at We plan new Basic We do not carry
our assortment replenishment inventory for items only replenishment replenishment
product is carry-over product is an product
considered a products during active part of the
"given" - focus is our assortment assortment
on fashion / planning process planning process
seasonal
product
Which other types of planning does your company perform? Select all that apply.
Other Types of Planning Performed (all respondents)
100%
80%
60%
40% 81.8%
50.9% 43.6%
20% 38.2%
0%
Merchandise Financial Item Planning Location Planning Space Planning /
Planning (MFP) Planogram

Level of Importance
in Defining Compelling Assortments
Compelling assortments represent desired consumer perspectives, and are defined by:
Providing highly edited assortments

with appropriate breadth & depth of 64% 29% 7%
color, sizes and vendors
Offering a balance of price points

(i.e., good, better, best) 60% 33% 7%
Elimination of unnecessary
duplication and unproductive 53% 40% 7%
aspects of the assortment
Delivering fresh
fashion-first statements 45% 42%
Differentiating products
from competitors 25% 55% 20%
Other 9% 11% 80%
Very Important Important Not Important
THE IDEAL SOLUTION

Level of Importance of
If your company Assortment
had an "ideal" Assortment Planning solution,
Planning Capabilities
what level of importance would you give the following features / capabilities?
(all respondents)
Linkage with MFP 65% 33% 2%
Ability to begin with a

63% 29% 8%
conceptual item
Linkage with PLM
52% 42% 6%
(for item creation)
Linkage with allocation /
52% 35% 13%
replenishment
Linkage with PO
46% 38% 17%
(ability to create a PO
Use of images / pictures 44% 38% 19%
Use of statistical
40% 38% 23%
forecasting
Linkage with space
29% 42% 29%
planning
Very Important Important Not Important
Appendix: Survey Respondent Demographics
Study Participant Demographics:

Retail Industry Segments
primary segment
secondary segment
71% growing segment
32%
22%
2%
7% 10% 2%
5% 17% 17% 10% 7%
7%
2% 10% 7%
7% 5% 5% 10% 5%
2% 2% 2% 2% 2% 2% 2% 2%
Apparel & Specialty Department Mass Grocery Other Furniture Pharmacy Warehouse Convenience
Footwear Store Merchant Club
/ Superstore

Channels
physical store 80.9%
traditional e-commerce 76.6%
mobile app or site 51.1%
social commerce 36.2%
catalog / call center 27.7%
television 17.0%
other 6.4%
Study Participant Demographics: Study Participant Demographics:

Functional Area of Responsibility Organizational Level

Planning & SVP / EVP / VP

Allocation, 48%
Director
24% 33%
Merchandising,
15%
Manager Other
Store 4%
Operations, 4% 20%
Logistics / Internal
Supply Chain / Consultant
General Distribution, 4% 4%
Management, 9% Staff
Human
Resources, 4% 6%
Information Other, 7% Senior Management

Technology, 9% (C-suite)
9%

Study Participant Demographics: Study Participant Demographics:

Most Recent Fiscal Year Revenue (USD) Number of Physical Stores
$5 - $10 billion
26%
0 - 100
34%
101 - 1,000
$50 million or less $1 - $4.99 34%
15% billion
26%
Over $10 billion

15% 1,001 - 5,000
26%
$100 - $499 million

12% $500 - $999 million Over 5,000
3% 6%
$51 - $99 million

3%

Company Location
91%
Headquarters
Retail presence
9%
5% 7% 5%
55%
41%
20% 20% 18% 9% 9%
United Canada Latin or Europe Asia Middle Africa
States South Pacific East
America
The Parker Avery Group
The Parker Avery Group is a boutique strategy and management consulting firm that is a trusted
advisor to leading retail brands. We combine practical industry experience with proven consulting
methodology to deliver measurable results. We specialize in merchandising, supply chain and the
omnichannel business model, integrating customer insights and the digital retail experience with
strategy and operational improvements. Parker Avery helps clients develop enhanced business
strategies, design improved processes and execute global business models.
Learn more about us at:

www.ParkerAvery.com
contact us:
3200 Windy Hill Road
Suite 950 West
Atlanta, Georgia 30339
t: 770 882 2205
f: 770 882 2206
e: contact@parkeravery.com

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retail consulting and industry thought leadership

Unraveling the Mysteries of Assortment Planning

There seems to be a certain

Copyright © The Parker Avery Group. All rights reserved. be selective.

The Importance of Assortment Planning ..................................................................................................... 3!

The Great Divide .......................................................................................................................................... 4!

Assortment Planning Objectives .................................................................................................................. 5!

Top Challenges ............................................................................................................................................ 6!

Other Significant Challenges ....................................................................................................................... 8!

Getting into the Details ................................................................................................................................ 9!

The Ideal Solution ...................................................................................................................................... 12!

Appendix: Detailed Survey Responses ..................................................................................................... 14!

Appendix: Survey Respondent Demographics .......................................................................................... 19!

The Importance of Assortment Planning

Copyright © The Parker Avery Group. All rights reserved. be selective.

The Great Divide

Assortment Planning Objectives

This suggests a second critical

• Quantify purchases or receipts by vendor

Copyright © The Parker Avery Group. All rights reserved. be selective.

these represented some level of Lack of

responses to a number of our Insufficient

interesting conundrums. Management

For example, in a separate

Once we looked beyond in-house

custom developed applications

Meanwhile, 37% of respondents

Copyright © The Parker Avery Group. All rights reserved. be selective.

Other Significant Challenges

Getting into the Details

products may also influence Assortment

Copyright © The Parker Avery Group. All rights reserved. be selective.

to each customer, based on individual planning 63% no plans to

preferences. However, this state of retail 19%

RELATIONSHIP WITH MERCHANDISE FINANCIAL PLANNING AND OTHER TYPES OF PLANNING

most merchandise financial planning

half+or+fewer+do' item, location

ASSORTING DIFFERENT PRODUCT TYPES

We asked how replenishment products,

the overall assortment. Just over a third of

Copyright © The Parker Avery Group. All rights reserved. be selective.

The Ideal Solution

Of slightly less importance (but not by much) were:

still considered important to well Ability to begin with a

over three quarters of the retailers Linkage with PLM

capability was linkage to space Linkage with PO

is still of some level of importance. very important important not important

Copyright © The Parker Avery Group. All rights reserved. be selective.

Appendix: Detailed Survey Responses

Which of the following are objectives of Assortment Planning at your organization?

Develop different assortments

Quantify sales at the

Plan sales by product attribute

Quantify purchases or receipts

Quantify purchases or receipts

Provide development direction to

Drive purchasing execution

Quantify salesby vendor 32.8%

Quantify sales at the

Quantify purchases or receipts

TOP CHALLENGES & OTHER SIGNIFICANT CHALLENGES

Other 4% 16% 80%

Significant Challenge Somewhat of a Challenge 16% Not a Challenge 80%