Assortment planning: principles and challenges for the company
Assortment planning is the anticipation and selection of the product offer proposed to consumers in physical stores or online. It is the result of the analysis and optimization of the assortment of products of a company. It allows to meet a customer's need and to participate in the development of retail sales. Planning belongs to merchandising, which covers three essential points: assortment planning, basic merchandising including store layout and consumer traffic, and shelf merchandising including product layout and visibility for customers. Assortment planning is a priority for the company as it will define its supply needs by model, size, color, stock quantities and other elements that we will discover on this page.
The elements of assortment planning
Assortment planning serves as the basis for the company's future supply orders. It is about defining and anticipating future sales, but also about the customer experience when choosing an item. The final consumer is the last link in this supply chain which goes through:
- product selection: renewal of the range, new products put on sale, removal of old references;
- the choice of the assortment: global quantity purchased, selection of colors, sizes, quantities per article;
- the definition of the selling price: negotiated purchase price, integration of the company's fixed costs, commercial margin;
- receipt of the product within the company;
- stock entry: registration in stock entry, physical place of the articles in the warehouse;
- placement in store and distribution;
- selection of products at promotional prices.
The distributor is thus faced with numerous technical, financial and logistical constraints before putting his products on sale. This is where assortment planning can be considerably improved by implementing an online solution using artificial intelligence software. This solution allows the creation of different assortment scenarios that take into account the variables specific to each company.
The benefits of assortment planning
By planning, we mean the matching of the company's sales policy, commercial strategy, marketing techniques and possible constraints. We also integrate data on customers, consumer habits, key products, products that we do not want to renew, the distribution method, etc. It is therefore clear that assortment planning is not just a classic stock renewal. It involves a technical and pricing reflection on the choice of brands, the physical layout of the products in the sales area, the number of items ordered and their distribution by categories and sizes.
One of the advantages of planning is the certainty of having the right product in the right place and sold at the right price. Predictive models based on artificial intelligence take into account the entire business experience and put it to work for the consumer. It identifies the positive and negative points of assortment management by highlighting:
- products with a high commercial margin;
- products that should not be renewed;
- items that are popular with customers;
- the most popular sizes and brands;
- market shares to be taken.
Assortment planning allows you to make the right choice for both the customer experience and the company's capacity.
The application of assortment planning to commercial sectors
The automated and predictive planning solution applies to all sales areas of the company:
- mass distribution;
- the pharmaceutical industry;
- consumer goods;
- tourism and events.
The assessment of assortment planning needs goes through the selection of the data to be integrated into the software, the company's objectives, the realization of an initial sales forecasting study and then the in-depth analysis of it. The software works on each level involved in the prediction of the purchase and sale of the final product. The integrated artificial intelligence allows the software to initially learn all the company's data, study it and then deliver a reliable predictive analysis in line with the company's merchandising policy.
Predictive analytics and mass distribution.
Mass distribution is one of the sectors most affected by the integration of artificial intelligence into its supply planning service. The distribution of products in the points of sale must be adapted to the sales area and the consumer's habits. The coordination between the choice of articles, the suppliers, the delivery, the definition of the selling price followed by the shelving in the store is a real logistic chain that must not be slowed down.
Its purpose is threefold:
- to have enough goods in stock to avoid shortages on the shelves;
- not to overstock products and risk losing them due to a short use-by date (fresh products);
- to balance the cash flow of the store between supply and sale.
In addition to these points come the policy of promotions on certain products, the optimization of margins and the assortment adapted to meet the needs of customers. Machine learning is now able to predict sales in a very precise way with solutions adapted to the client's sales and marketing policy.
The application of planning to the pharmaceutical industry
Another example of the application of intelligent planning is the pharmaceutical industry. This sector is subject to large fluctuations in the demand for drugs depending on the season (flu vaccines, for example). Supply planning thus makes it possible to follow the evolution of pharmacies' demand cycles, through a very detailed analysis of pharmacies' habits.
The pharmaceutical industry is also subject to the arrival and withdrawal of drugs on the health market. The monitoring of marketing authorizations is essential, since these will lead to a more or less massive production of drugs. Each factor is thus integrated into the intelligent planning software. It will model them and enable appropriate decisions to be made regarding supply and manufacturing.
The early detection of stock-outs is one of the key elements of assortment planning. The sales of each product reference are analyzed and then anticipated by the software, thus detecting the risk of stock-outs. The product availability offer can then be rationalized, by taking measures adapted to the real needs of the customer.
Prediction of the number of meals in the restaurant industry
The restaurant industry is one of the sectors where anticipating the number of meals is essential. This sector is strongly involved in forecasting its sales, whether it is:
- management of fresh produce;
- the elimination of food waste;
- the days when the restaurant is used;
- selection of foodstuffs with an attractive purchase price;
- requirements during peak season.
Merchandising is therefore fully applicable to this food sector where the customer experience must be the best possible. Anticipation, through the quality of the meals served, the search for the best purchase prices and just-in-time supply, is very important here.
Artificial intelligence applied to the catering sector is ideal for planning meals and staff presence. It is now sufficiently developed to define the number of meals to be prepared in the next few hours. It integrates, in fact, notions such as the weather, school vacations, empty hours and the usefulness of creating a promotion on a menu.
Finally, artificial intelligence is a perfect solution for a restaurant's menu. It integrates previous order data by dish and analyzes which dishes are most popular with customers. This prediction allows the restaurant owner to know perfectly which dishes to keep and which to replace, while analyzing in depth the costs of purchasing raw materials, their seasonality and the commercial margins left to the company.
The importance of demand forecasting
The knowledge of the consumer and his habits is the main element that the intelligent assortment management software focuses on. It analyzes his behaviors as:
- the regular visit of the store or the website;
- the average basket;
- shopping cart abandonment in e-commerce;
- preferred size or color;
- preferred brands;
- frequency of purchases;
- geographic location.
An artificial intelligence platform coupled with the sales management software or CRM ensures the optimized management of future requests. From this study comes the supply of the store or warehouse, the promotions to be implemented and therefore, the anticipation of future commercial flows. The company can therefore forecast the cash flow it will need, the operational staff and the amount of purchases to be made.
As we can see, artificial intelligence for assortment planning takes into consideration all the company's departments, from the purchasing department to the end customer, including the supply of raw materials, stocks, shelf layout, the usefulness of creating promotions, and the need to pass on certain end-of-life products.