Assortment Planning in Retail: What Is It and How to Get Started

Inventory takes up space. Slow sellers drain your cash flow. And running out of popular items? That’s just leaving money on the table.

If your product mix feels like a guessing game, it might be time to rethink how those decisions are made.

Assortment planning gives you a clearer way to choose what to stock, where to stock it, and how much of it you actually need.

What is Assortment Planning?

Assortment planning is the process of selecting the right mix of products to offer in the right places, at the right time, and in the right quantities.

It helps businesses meet customer demand while minimizing overstock, markdowns, and missed sales opportunities.

By balancing product variety with demand, retailers and eCommerce teams can improve profitability, optimize inventory, and deliver a better shopping experience—whether online or in-store.

How It Works

Assortment planning is both strategic and data-driven. It uses past performance, customer preferences, and market trends to decide which products to stock, how much to stock, and where to place them.

It focuses on three key dimensions:

• Breadth – The number of product categories
• Depth – The number of SKUs in each category
• Width – The variations of each item (size, color, style)

Step 1: Start with a merchandise plan

Determine how much budget is allocated per category or collection, often tied to sales goals, seasonal timing, and market strategy.

Step 2: Analyze historical and real-time data

Look at previous sales, customer trends, seasonal behaviors, and product performance to identify what to repeat, change, or remove.

Step 3: Create the product mix

Select which products to offer by category, price point, and style based on forecasted demand and business goals.

Step 4: Localize or segment assortments

Tailor product offerings by channel (e.g., online vs. store), location, or customer group to match regional or audience-specific preferences.

Step 5: Implement and monitor

Push assortments live across channels. Use sales reports and customer feedback to adjust and optimize performance in real time.

Examples

To put it simply, assortment planning is like building a playlist for your store.

You don't just add every song—you pick the tracks your audience loves, organize them by mood or theme, and update them based on how people respond.

Fashion Retailer:

A clothing brand might offer lighter fabrics in tropical regions and heavier coats in colder ones, with different styles based on local fashion trends.

Grocery Chain:

Supermarkets may adjust assortments based on neighborhood demographics—stocking more plant-based options in health-conscious areas and more family packs in suburban stores.

Online Electronics Store:

An eCommerce shop might push more gaming gear during back-to-school season, while featuring work-from-home accessories in Q1 when corporate buyers stock up.

Why is Assortment Planning Important?

Assortment planning means picking products based on what your customers actually want, not just guessing what might sell.

When done right, it helps you boost sales, reduce waste, and make every item on your shelf or site truly matter.

It Reduces Overstock and Missed Sales

By using sales data and trends to forecast demand, you avoid ordering too much (which leads to markdowns or spoilage) or too little (which leads to stockouts and missed revenue).

This helps you maintain a leaner, more profitable inventory.

It Aligns Product Mix with Customer Demand

Assortment planning ensures your product offerings match what customers are actually looking for—like trending styles, local favorites, or seasonal must-haves.

This boosts customer satisfaction, loyalty, and overall sales.

It Helps You Optimize Performance Across Locations and Channels

What sells well in one city might not perform in another. And your online shoppers may prefer different options than your walk-in customers.

Assortment planning lets you tailor product mixes by region, season, or platform—making your business more agile and competitive.

When Should You Consider Assortment Planning?

If you're planning or at least considering doing assortment planning, then you should start once you’re managing more than 20 to 30 products or selling across multiple locations or channels.

At this point, it becomes harder to keep track of what’s working and what’s not, which can lead to overstock, missed sales, or irrelevant offerings.

How to Get Started with Assortment Planning

If you’re thinking about building a smarter product mix, assortment planning is a great place to begin.

It helps you make more confident decisions about what to sell, how much to stock, and where each item fits best—based on data, not guesswork.

Step 1: Review Your Product and Sales Data

Start by looking closely at what you’ve been selling.

Identify which products consistently perform well, which ones are sitting too long in inventory, and what patterns show up during certain times of the year.

You can also check customer reviews, refund reasons, and product search trends to understand what your buyers actually care about.

Step 2: Set Clear Goals and Create a Budget

Decide what you want to improve.

Some brands aim to increase profit margins, while others focus on cutting waste or offering a better variety.

Once your priorities are clear, assign a working budget per product category or collection, so you know what resources you can work with as you plan.

Step 3: Select the Right Product Mix

Now that you have data and direction, it’s time to choose which products to offer.

Think about which items belong in your lineup based on seasonality, trends, pricing, and relevance to your customers.

This is where you decide how wide your assortment will be across different categories and how deep it will go within each one.

Step 4: Adjust Based on Location or Sales Channel

Different locations and sales platforms attract different types of buyers.

A local store in a cold climate might need more outerwear, while your online store can offer extended sizes or exclusive color options.

Use your knowledge of customer behavior in each area to make the right adjustments.

Step 5: Track, Learn, and Refine

After your assortment is live, watch how it performs in real time.

Track key metrics like sell-through rates, out-of-stock issues, and customer feedback.

Use what you learn to adjust your current assortment and plan smarter for the next cycle.

FAQs

What’s the difference between assortment planning and merchandising?

Merchandising covers the overall strategy of selling products, including pricing, promotions, store layout, and visual displays. Assortment planning is one part of that—it focuses specifically on choosing which products to offer, in what quantities, and where they should be available based on customer demand and data.

What are some best practices for assortment planning?

Start with clear goals and use real sales data to guide your decisions. Always consider customer behavior, seasonality, and regional preferences when building your product mix. Keep your assortments flexible, track how each product performs, and adjust as needed to stay relevant and avoid waste.

What are the common challenges in assortment planning?

The biggest challenges often include having too many SKUs, not enough customer data, or trying to please every audience at once. It’s also common to struggle with forecasting demand, especially when trends change quickly or when selling across different locations and platforms.

Conclusion

If you're planning to take your product planning, shipping, or post-purchase experience to the next level, we’ve built a full suite of solutions that can help.

Feel free to explore more about what we do on our homepage, dig deeper into insights via our blog, or learn about our specialized solutions like shipping automation, carrier management, last mile intelligence, and customer experience tools.

We also support businesses of all sizes, from enterprise-level operations to small business setups. So if you're in retail, e-commerce, or anywhere in between, you’ll likely find a solution that fits your current and future needs.

If you’d like to explore how we can help you plan, scale, or streamline your operations, feel free to reach out to us directly. And whatever next steps you’re planning after this read—we’re wishing you all the best as you move forward.