Assortment Planning in Retail: What It Is & Examples (Guide)

Assortment planning is about selecting the right products and ordering the right quantities to meet your customers’ demand at the right moment.

This article offers specific examples of various assortment planning strategies. You’ll also learn how KORONA POS, a retail POS system, can help you streamline your inventory and assortment planning process.

What Is Assortment Planning In Retail? 

Assortment planning is a process retailers use to decide which products to sell during a given time of year. In other words, assortment planning helps retailers determine which products to sell and where to sell them, based on seasonality and demand at specific locations.

Retailers consider several factors when developing assortment planning, such as size, color, price, and SKU numbers. Assortment planning is also performed differently depending on the store’s location.

When To Consider Assortment Planning?

Assortment planning is something every retailer, whether you run a small boutique or a multi-location store, must consider as their business grows. But when should you start prioritizing assortment planning? Here are some key moments and factors to consider:

Reason #1: Product Selection Feels Random or Overwhelming

If your store feels cluttered or disorganized, or you’re getting feedback like “You have a lot, but not what I’m looking for,” your assortment needs more focus. In this circumstance, assortment planning helps you narrow options to what truly sells and aligns with your clientele.

Reason #2: Expanding or Opening a New Location

Whether it’s your first or third expansion, every location might serve a slightly different audience. Assortment planning ensures you tailor your product mix to the neighborhood, foot traffic, and local preferences rather than copying and pasting your setup across locations.

Reason #3: Too Much Dead Stock

If dead stock becomes a theme at your retail store, it’s a sign that you need better assortment planning. If you notice specific categories rarely move, or you constantly have to mark them down, it’s time to revisit your assortment strategy. Doing so will help you plan your inventory investments more accurately and avoid investing in slow moving inventory.

Reason #4: Sales Are Seasonal or Trend-Driven

Fashion, beauty, specialty food, and gift shops experience intense seasonal swings. If your sales rise and fall dramatically, you need a clear plan for what to stock and when to rotate it out. Assortment planning helps you capitalize on trends without overcommitting.

Reason #5: Improve Margins or Sell More High-Value Items

Not all products are created equal. Some have better margins, others draw people in the door. With assortment planning, you can shape your product mix to focus on more profitable items while still maintaining enough variety to satisfy different price points.

Reason #6: Building a Stronger Brand Identity

Your product assortment says a lot about your business. If you’re trying to become known for curated, high-quality goods, or want to be the go-to place for specific items, your mix needs to reflect that. Assortment planning helps you build consistency and customer trust.

Reason #7: Investing in eCommerce or Omnichannel Sales

Selling online introduces new complexity. You might not want to list every item in-store, and you’ll need to consider shipping sizes, stock visibility, and cross-selling. A tight assortment makes your online store easier to manage and more appealing to browse.

Reason #8: Making Data-Driven Decisions

Once you’re regularly reviewing sales reports and tracking KPIs like sell-through rate, stock turnover, or gross margin return on investment (GMROI), it’s time to start planning your assortment with purpose. Good data should guide what you keep, cut, or test.

Reason #9: Insufficient Storage Space

Not having enough space to store all your products can become a real problem as your business grows. With assortment planning, it is possible to strategically plan inventory based on your storage capacity and available shelf space to make the most of your retail store space.

Reason #10: Permanent Stockouts

Stockouts are just as much of a concern as dead stock. When you run out of certain products regularly while demand is still high, you need to improve your assortment planning so that you don’t have to restock products frequently to keep up with sales volume.

Reason #11: Uncontrolled SKU Proliferation

While SKU proliferation is essential to growth, offering too many SKUs can reduce your profits. Assortment planning lets you rationalize SKUs, control inventory sprawl, and focus your investments on the most profitable items.

Successful Assortment Planning Process in Retail

Assortment planning requires a straightforward process and can be a bit daunting. Before you start, ensure you understand the following best practices for assortment planning. Here are a few of them:

Start With Comprehensive Data Insights From Your POS Software

In any inventory management system, a sophisticated retail POS can provide you with the sales reports you need in real-time to make decisions. Accurate data is necessary to streamline the assortment planning process. Some of the most relevant metrics to track for assortment planning:

• Inventory turnover rate
• Historical sales data
• Lead times
• Cost per unit for each SKU
• Revenue per unit for each SKU
• Conversion rates
• GMROI reports
• Sales rates

Forecast Demand With Precision

Use historical sales trends, seasonality, promotional calendars, and lead times to forecast how much inventory you’ll need and when. POS-driven demand forecasting helps prevent overstocking slow movers while ensuring high-demand items stay available.

Set Realistic and Measurable Goals

Your goal should be to create a practical, achievable assortment plan that fully leverages your store’s data. Set smaller goals, such as optimizing product selection for a single product category or better sales for a site or sales channel.

Build Your Product Hierarchy the Right Way

Product hierarchy, or consumer decision trees (CDTs), are visual diagrams that help manufacturers and retailers understand consumer buying behaviors and the decision-making steps individuals take when shopping within a category.

Optimize SKUs for Profitability

Evaluate products based on performance metrics like GMROI, sales velocity, margin contribution, and return rates to identify which items truly drive profitability. Eliminating underperforming or redundant SKUs frees up money and shelf space for higher-margin or faster-moving products that better serve customer demand.

Leverage Cross-Merchandise

Cross-merchandising is a visual merchandising strategy that involves displaying complementary products next to each other. It is effective because it allows you to target in-store promotions based on product affinity, thereby increasing sales and average order value.

Apply a Smart Pricing Strategy (High-Low)

To balance your assortment through pricing, you can also adopt Ulta Beauty’s high-low pricing strategy. The brand offers a variety of affordable yet luxurious skincare products, allowing shoppers to choose from a wide selection.

Allocate Inventory Based on Store & Channel Profiles

Use POS data to tailor your inventory by store size, geography, foot traffic, and online vs. in-store performance. Strategic allocation ensures each channel carries the proper depth and mix of products, improving sell-through rates and reducing costly transfers or markdowns.

Types of Assortment Strategies And Examples

A company can use several assortment planning strategies. As aforementioned, these strategies are primarily based on depth and breadth. Here are some examples of standard assortment models:

Wide Assortment

A wide assortment strategy is used when retailers aim to offer many different product lines or categories, but with less depth within each category.  For example, a convenience store that offers many other products but stocks only one or two brands per type uses a wide assortment strategy.

Deep Assortment

A deep assortment strategy proposes many options in a given product category. This strategy is common among specialty stores that focus on fewer product lines with high depth and variety within each line.

Localized Assortment

A localized assortment strategy allocates the product line based on the local population’s preferences and the geographic area’s characteristics. The strategy enables the retailer to meet diverse customer demands by geography, thereby increasing sales.

Scrambled Assortment

When a company has a scrambled assortment, its product line diversifies to include products beyond its core categories. Retailers using scrambled assortment strategies aim to provide products outside their core business and target a broader audience.

Mass-market Assortment

Mass assortment strategies address the mass market by offering as many product categories as possible and a wide selection of items in each category. Stores with large physical storage capacities, such as Walmart and Amazon, use this strategy.

Narrow Assortment

Narrow assortment focuses on limited, high-quality, or niche products. A boutique like Everlane offers a curated selection of sustainable clothing. This builds brand loyalty among specific audiences but limits market reach.

Broad Assortment

A broad assortment provides moderate variety across multiple categories without deep specialization. Kohl’s offers clothing, home goods, and accessories at accessible prices, balancing appeal and affordability but may not satisfy niche demands.

Horizontal Assortment

Horizontal assortment expands variety at the same price or quality level across categories. For example, H&M offers a diverse range of clothing styles at affordable prices. The horizontal assortment attracts budget-conscious shoppers but requires consistent quality control to maintain trust.

Vertical Assortment

Vertical assortment offers products at different price points or quality levels within a category. For example, in one store, Apple sells older iPhones, newer models, and premium Pro versions. It captures a wide range of budgets but demands clear branding to avoid confusion.

Best Practices for Improving Assortment Strategies in Retail

Below are actionable best practices tailored for retailers and small business owners to refine their product assortment, grounded in consumer behavior, technology, and data-driven decision-making:

Practice #1: Align Assortment with Consumer Behavior and Market Trends

Analyze purchasing patterns, seasonal demands, and emerging trends to understand customers’ preferences. Use point of sale data and customer feedback to identify top-selling products and gaps in your offerings.

Platforms like KORONA POS offer real-time insights into sales trends, helping you plan assortments with precision. With KORONA POS, you can automate data analysis to reduce manual errors and make informed decisions about product variety and stock levels.

Practice #2: Balance Variety with Demand Forecasting

Too much variety can overwhelm customers and tie up working capital. Use demand forecasting models to stock your best-sellers consistently while testing new products in small batches. Maintain a core assortment that drives profit, then rotate complementary or seasonal items based on predictive data.

Practice #3: Review and Refresh Assortment Regularly

Your product mix shouldn’t be static. Set regular cadence (monthly or quarterly) to assess performance metrics like turnover ratio, gross margin return on investment (GMROI), and stockout rates. To stay competitive and agile, eliminate low performers and replace them with trending or complementary items.

Practice #4: Use ABC Analysis to Prioritize Stock

Segment your inventory using ABC analysis:

• A-items are high value, low volume (top sellers),
• B-items are moderate, and
• C-items are low value, high volume.

Focus your assortment decisions and resources on A-items while controlling the costs and space occupied by C-items.

Practice #5: Localize Your Assortment by Store Location

If you operate multiple locations or sell online and in-store, tailor your assortment to local customer preferences. Weather, demographics, and cultural differences affect buying habits. Geo-specific assortment planning boosts conversions and prevents overstocking the wrong products in the wrong places.

Practice #6: Strengthen Supplier Relationships

Better supplier partnerships enable more flexible ordering, faster restocks, and improved access to exclusive or trending products. It can help you respond to demand shifts more quickly without overcommitting capital. Regular communication with vendors can also lead to collaborative planning and better pricing.

Practice #7: Test and Scale New Products Cautiously

Before fully committing to new SKUs, run small-scale tests in select locations or for limited periods. Monitor sell-through, customer reactions, and margins. If they perform well, scale up.

Tips to Make Your Assortment Planning More Effective

Small, consistent improvements can make your assortment planning more accurate, flexible, and profitable over time.

• Review and adjust often: Assortment planning isn’t static—use real-time POS data to respond quickly to changes in demand, seasonality, and customer behavior.
• Balance variety with focus: Offer enough product choice to meet shopper needs without overloading shelves with similar or redundant SKUs.
• Manage product lifecycles intentionally: Introduce new items with a plan and set clear criteria for phasing out slow-moving or underperforming products.
• Let data support experience: Merchant intuition is valuable, but pairing it with metrics like GMROI, turnover, and sales velocity leads to better decisions.
• Test before expanding: Trial new SKUs or assortment changes in a single store or channel before scaling across your business.

Common Assortment Planning Mistakes and How to Overcome Them

Achieving the right balance between variety, depth, and profitability is complex and riddled with challenges. Below are some of the most common challenges in assortment planning and strategies to overcome them.

Data & Metrics That Drive Assortment Decisions

Successful assortment planning relies on turning POS data into actionable insights that inform what to carry, how much to stock, and where to allocate inventory.

• Sales performance: Track units sold, sales velocity, and revenue per SKU to understand what products consistently drive demand.
• Inventory turnover: Measure how quickly inventory sells through to identify fast movers versus items tying up capital.
• Gross margin & GMROI: Evaluate not just sales volume, but how efficiently each SKU generates profit relative to inventory investment.
• Historical sales trends: Use past performance, seasonality, and promotion history to anticipate future demand more accurately.
• Lead times & replenishment cycles: Factor in supplier lead times to avoid stockouts or excess inventory.
• Return and refund rates: High return rates can signal quality issues, pricing misalignment, or poor product fit.
• Channel-specific metrics: Compare in-store, online, and omnichannel performance to tailor assortments by channel.

Differences Between Assortment Planning and Merchandise Planning (HERE)

Merchandise planning is the broader process that determines which categories or departments you’ll invest in based on sales goals and market trends. Assortment planning, however, dives deeper into the specific products, sizes, colors, or styles within those categories to satisfy customer demand.

Here’s a quick breakdown:

Top Goals Behind Assortment Optimization in Retail

Assortment optimization focuses on four core goals that help retailers sell more, serve customers better, and improve profitability. To make these goals easier to scan and apply, the key ideas below are broken into clear, practical bullet points:

Maximize Sales and Revenue

• Stock products with consistently high demand
• Remove slow-moving or underperforming items
• Use sales data, customer behavior, and market trends to guide decisions
• Keep shelf space focused on products most likely to convert

Enhance Customer Satisfaction and Loyalty

• Align product mix with customer needs and preferences
• Tailor assortments by location, climate, or demographics
• Reduce frustration from missing or irrelevant products
• Encourage repeat visits through consistent availability

Optimize Inventory Efficiency

• Prevent overstock that ties up cash or creates waste
• Avoid stockouts that lead to lost sales
• Use demand forecasting and predictive analytics
• Improve inventory turnover and seasonal planning

Increase Profit Margins

• Prioritize high-margin and private-label products
• Balance variety with profitability
• Maintain competitiveness while improving returns per SKU
• Strategically position higher-margin items alongside national brands

Implementing An Assortment Planning Process With KORONA POS

KORONA POS is a point-of-sale and inventory management system built for retail businesses like convenience stores, liquor stores, and vape shops. In addition to standard product groups, it includes robust assortment functionality to help retailers manage product mix more strategically.

Retailers can filter reports by merchandise group or assortment to analyze sales history, inventory turns, and order destinations for better inventory planning. Products can be assigned individually or in bulk, assortments can be refined through automated clean-up tools, and data can be imported to efficiently update large catalogs.