Why every retailer should be range planning

The art – and science – of range planning

You may not have heard the phrase ‘range planning’ before but, as a retailer, you will already be doing elements of it every day.  The goal of range planning is to create the most profitable product offer aligned to your customer needs.  It involves analysing previous product performance, creating a framework for the products you want to sell next, some sales forecasting and a big dollop of your retailing instinct.

Getting the right blend of ‘the numbers’ and selecting awesome products will help you on the journey to selling more of what you buy/make, giving away less discount and tying up less working capital in stock.  Which all means….MORE PROFIT!

Step 1 – knowing the history

If you have been trading a little while, this is the bit where you invest time in analysing what’s already happened.  Over a period of time that makes sense for your business (e.g. 3, 6, 12 months) how much did you buy (or make) of each product, how much did you sell and at what price (i.e. how much profit did you make?)? 

Review this both by product (what were your best and worst?) and by groups of products.  These are the product groupings I look at most frequently with my clients, you may have others that are important to your business too:

• Category e.g. Notebooks & Journals, Pens & Pencils, Candleholders, Water Bottles

• Sales channel e.g. website, social media, in store

• Colour

• Price point

• Supplier

If you haven’t started trading yet, it’s research time!  Gain as much market knowledge as you can from publicly available market research, speaking with other business owners in the same field as you, suppliers and anyone you can become connected with who has experience in this space.

Step 2 – create your range framework

Sometimes called assortment planning, creating your range framework is a bit like building your shopping list for your upcoming product range.

Using the analysis or research you did in step 1 and your knowledge of current trends in the market, forecast which product categories will grow, maintain and decline in sales (or that you will exit out of completely).  Decide how many different products you need in each category to deliver those sales.

If you have been analysing by colour and price (or any other grouping that’s important to your business), you can decide how many different products you need within those groupings too.

Also forecast your profit margin by category at this stage.  The more data you have from previous trading, the easier this will be to do.

Step 3 – select your products!

Now that you’ve determined how many different products you need in each category, you can go and source them!  Ensuring you have a good balance of colour, price point, size, fragrance or whatever factors are important to your product offer, you can take your shopping list and decide which products will be a part of your upcoming range.

This is where a ‘Range Plan’ becomes a necessity.  A Range Plan is a document that captures all of the products you will be selling, information about those products (your cost price, the selling price, the profit margin, colour, supplier, lead time etc), your forecasted sales of each product and how many units you need to buy/produce for the time period you’ll be selling those products.  Note – you don’t have to buy all of the stock at once!

Software firms have created specialist assortment and range planning tools but in most cases a good old spreadsheet will be more than sufficient.  Check out how Annie from Ethereal London uses a Range Plan to plan the buys for her beautiful silk dresses.

Step 4 – tracking performance

Now you’re selling all the wonderful products you previously selected, tracking their performance is the most crucial thing you can do to ensure all that analysis and planning pays off.

This means that if you don’t already have a method of recording every single sale (what products you sold and how much for), it’s time to find one that works for you.  If you have a till that scans barcodes, you’re most of the way there already.  The same is true for sales made via websites, your website analytics will generate sales reports.  Some of my clients simply use pen & paper at the tillpoint and type that information into a spreadsheet at the end of the day/week/month.

Tracking the performance allows you to identify early which products and categories are performing in line with, ahead of or behind the sales plan and – if needed – to take action on price or stock before too much of your profit margin is lost.

This means less instances of being out of stock of products that are selling well (and the resulting lost sales opportunities) and less instances of having huge amounts of stock left on poor sellers at the point when you’re trying to launch your new product ranges (so less heavy discounting and less switching the sales from your lovely new products to the old, discounted ones).

And here’s the clever bit…tracking sales as they happen will mean you already have all the information you need to analyse product and category performance in Step 1 of preparing for your next product offer.

Does this all sound a bit scary and time-consuming?

It can seem a bit overwhelming if this is all new to you.  It’s not as bad as it might initially seem, I promise!  You will organically be doing some of this in your business already - but most likely not using a Range Plan or undertaking analysis of previous product performance to help shape a framework for your future product ranges.

If you feel like you don’t know where to start, book an appointment for a free 30 minute chat with Claire from Retail With Clarity to help you work out what’s right for your business and how you can up your range planning game.