Assortment plan: Step-by-step guide to smarter product mixes

Every retailer knows this pain.

Your bestsellers are sold out while unwanted inventory collects dust. Customers can’t find what they need, and you’re stuck with products nobody wants.

The difference between struggling and thriving? Strategic assortment planning.

Most retailers guess which products to stock, then scramble to fix mistakes. Smart retailers use data-driven assortment planning to turn inventory decisions into competitive advantages.

What you’ll learn

What is an assortment plan?

An assortment plan is a data-driven blueprint that identifies which products, styles, and quantities you will carry, where you will sell them, and when. This strategic framework goes beyond simple inventory management by considering customer preferences, market trends, and operational capabilities to create an optimal product mix through a well-structured assortment plan.

At its core, an assortment plan balances two critical dimensions: width and depth. Width refers to the variety of different product categories you carry, while depth represents the number of options within each category. A successful assortment plan strikes the right balance between these dimensions based on your business model and customer needs.

The key elements of an effective assortment plan include specific product selection criteria that align with your brand positioning, quantity planning that considers location and channel requirements, and timing considerations that account for seasonality and market dynamics. This differs fundamentally from a merchandise plan, which focuses on how to present and promote products rather than which products to carry.

Your assortment plan serves as the foundation for all downstream decisions. While the assortment plan determines what products you’ll stock, your merchandise plan determines how you’ll showcase and sell those products to customers. This distinction is crucial because an excellent merchandise plan cannot compensate for a poorly constructed assortment plan.

When developing your ecommerce fulfillment strategy, remember that your assortment plan must account for omnichannel considerations. The products you choose need to work effectively across all sales channels while maintaining consistent brand experience.

Why assortment planning matters in 2025

The business impact of strategic assortment planning has never been more significant.

Improvements stem from better alignment between customer demand and product availability. When you stock the right products in the right quantities through a strategic assortment plan, you naturally reduce stockouts while minimizing excess inventory. This balance directly translates to improved customer satisfaction and increased profitability.

The customer experience benefits extend beyond simple availability. Strategic assortment planning ensures customers find what they want when they want it, across all touchpoints. This consistency builds trust and loyalty while reducing the friction that drives customers to competitors. Your omnichannel fulfillment approach becomes more effective when supported by thoughtful assortment decisions.

Risk mitigation represents another crucial advantage. Strategic reduction can improve performance by eliminating complexity and focusing resources on high-performing products.

Core models you can use

Understanding the four primary assortment models helps you choose the right strategic approach for your business. Each model offers distinct advantages depending on your customer base, operational capabilities, and competitive position when building your assortment plan.

• The wide versus deep comparison forms the foundation of assortment strategies. Wide assortments offer many categories with fewer options per category, making them ideal for convenience-focused shopping. Deep assortments provide fewer categories but extensive options within each, perfect for specialty retailers or expert customers seeking specific solutions.

• The scrambled assortment model combines unrelated product categories for customer convenience. Grocery stores exemplify this approach by carrying everything from food to electronics to pharmacy items. This model works best when customer convenience outweighs the complexity of managing diverse product assortment categories.

• Localized or clustered approaches customize assortments based on specific demographic or geographic factors. This model requires sophisticated data analysis but delivers highly relevant product selections. For retailers handling specialized fulfillment requirements, deep assortments often work better since customers expect comprehensive options for niche products.

• Mass-market models focus on broad appeal across customer segments by emphasizing proven bestsellers and avoiding niche items. This approach minimizes risk but may limit differentiation opportunities. The key is understanding which assortment strategies align with your brand positioning and customer expectations.

8-step assortment planning process

Creating an effective assortment plan requires systematic execution across eight critical steps. This framework ensures you consider all relevant factors while maintaining focus on your strategic objectives.

Begin by establishing specific, measurable goals for your assortment plan. Define clear success metrics such as inventory turnover targets, gross margin improvements, and customer satisfaction scores. Your objectives should align with broader business strategy while providing concrete benchmarks for evaluation.

Analyze past sales performance to identify trends, seasonal patterns, and customer preferences. Study competitor moves and market dynamics to understand opportunities and threats. Quality data forms the foundation of every successful assortment plan, so invest time in gathering comprehensive information about inventory performance and customer behavior.

Group customers by demographics, purchasing behavior, and location preferences. Understanding these segments allows you to tailor assortments to specific needs rather than applying one-size-fits-all approaches. Retailers who segment effectively can dramatically improve both customer satisfaction and profitability.

Create a width/depth matrix that balances categories and SKUs based on your analysis. This preliminary assortment should reflect your strategic direction while considering practical constraints such as space limitations and operational capabilities.

Forecast demand under different conditions to validate your preliminary mix. Test various scenarios, including seasonal fluctuations, promotional impacts, and competitive responses. This stress-testing helps you optimize inventory levels and identify potential risks before implementation.

Set final order quantities and customize assortments by location or channel. Consider your fulfillment capabilities when making these decisions, ensuring you can deliver on customer expectations across all touchpoints.

Implement purchasing decisions and distribute inventory strategically across your network. Effective execution requires clear communication with suppliers and coordination with merchandising teams to ensure proper product presentation.

Track performance against your KPIs and adjust based on results. Assortment planning in retail requires continuous refinement as market conditions and customer preferences evolve. Establish regular review cycles to maintain optimal performance.

Optimization tactics

Advanced optimization tactics help you extract maximum value from your assortment plan while adapting to changing market conditions. These strategies build upon your foundation to deliver sustained competitive advantage.

• Balancing evergreen versus seasonal SKUs requires careful consideration of the 70/30 rule, where 70% of your assortment consists of stable, year-round products while 30% rotates seasonally. This balance provides stability while allowing flexibility to capitalize on seasonal opportunities through assortment optimization.

• Cross-merchandising and attach-rate boosters create additional value by strategically placing complementary products. Effective merchandising increases average transaction values while improving customer satisfaction by making shopping more convenient. Bundle opportunities emerge naturally when you understand customer purchase patterns and product relationships.

• Omnichannel considerations require different assortment strategies for different channels. Your BOPIS inventory allocation must account for local demand patterns while maintaining overall efficiency. Consider your omnichannel fulfillment strategy when making these decisions to ensure consistent customer experience across all touchpoints.

• Technology integration dramatically enhances optimization capabilities. AI-driven planning analyzes real-time trends, predicts demand, and optimizes inventory allocation more effectively than manual processes.⁴ Companies like Fresh Market have successfully implemented AI across 166 stores, improving availability while reducing waste.⁵ Use these tools to continuously refine your assortment plan rather than relying on periodic manual reviews.

Metrics & dashboards to track

Measuring assortment performance requires tracking key indicators that reflect both financial and operational success. These metrics provide the insights needed to make data-driven adjustments and demonstrate ROI from your assortment plan.

• Primary profitability metrics focus on gross margin return on investment (GMROI), which measures how effectively your inventory generates profit. Strong GMROI exceeds $3.20, while values below 1.0 indicate losing money.⁶ Industry benchmarks vary significantly.

• Inventory performance indicators include sell-through rates and stock-to-sales ratios. Ideal sell-through rates exceed 80%.⁸

• Dashboard setup recommendations should emphasize real-time tracking and automated alerts for underperforming items. Your system should integrate with fulfillment performance metrics to provide comprehensive visibility into service levels and fill rates across all channels.

Real-world examples

Understanding how different industries apply assortment planning principles helps you adapt these concepts to your specific situation. These examples demonstrate practical applications across various business models and assortment plan implementations.

Fashion retailers often use cluster-based approaches where regional preferences drive localized assortments. A fashion retailer might stock different size curves and style preferences based on geographic markets, recognizing that customer preferences vary significantly by region.

DTC skincare brands frequently employ deep assortment strategies, focusing on limited categories with extensive product variations. These brands often integrate subscription models that require careful assortment planning to maintain customer interest while managing inventory efficiently. Consider your Shopify fulfillment solution when implementing these strategies to ensure seamless execution.

Grocery retailers exemplify scrambled assortment approaches by combining convenience-driven category mixing with high-turn essentials and impulse items. These retailers balance the complexity of managing diverse product assortment categories with the customer convenience that drives traffic and loyalty.

Common pitfalls & how to avoid them

Avoiding critical mistakes in assortment planning prevents costly errors and ensures successful implementation. Understanding these pitfalls helps you navigate challenges more effectively when developing your assortment plan.

• The SKU proliferation trap occurs when retailers assume more variety automatically equals better performance. To avoid this, focus on velocity over variety by analyzing which products truly drive sales and profitability. More assortment options can confuse customers and increase operational complexity without delivering proportional benefits.

• Analysis paralysis prevents timely decision-making when teams become overwhelmed by data and possibilities. Set clear decision deadlines and apply the 80/20 rule, where 80% of your results come from 20% of your efforts. This approach helps you optimize decisions without getting stuck in endless analysis cycles.

• Supply chain misalignment occurs when assortment plans exceed fulfillment capabilities. Ensure your third-party logistics partner can support your assortment strategy, particularly for inventory management and distribution across multiple channels.

Citations

1. Vusion. “AI in Retail Analytics to Boost Assortment and Revenue.” Vusion, 28 Apr. 2025. https://www.vusion.com/na/insights/ai-in-retail-analytics-to-boost-assortment-and-revenue/.
2. Retalon. “The Future of Assortment Planning: AI-Driven Predictive Analytics.” Retalon Blog, 11 June 2025. https://retalon.com/blog/ai-driven-assortment-planning.
3. Shopify. “GMROI for Retail: Formula & How to Calculate (2024).” Shopify Retail, 11 Apr. 2022. https://www.shopify.com/retail/gmroi.
4. SPS Commerce. “Understanding Sell-Through Rate.” SPS Commerce, 15 May 2024. https://www.spscommerce.com/blog/sell-through-rate/.
5. Heuritech. “Sell-Through Rate: Boost Sales And Inventory Management.” Heuritech, 25 Oct. 2024. https://heuritech.com/articles/sell-through-fashion/.