A range plan is one of the most important planning documents for a designer or merchandiser in fashion retail. It acts as a blueprint of a new collection and helps you set the overall direction of the collection. The range plan is involved in a variety of merchandising processes from product design and development, sales forecasting, and allocation.
A standard range plan contains detailed information at SKU level, outlining each style design with the name of the product, colour, material composition, sizing grid, and key financial data such as unit cost, selling price and gross margin. Range planning is fundamental to ensure that a cohesive product assortment is developed which not only to meets your customer’s demands but also achieve your financial objectives.
The framework for range planning
An effective range planning involves informed decision-making. The process begins with an analysis of your business beyond just the products that are trending – based on historical performance, coupled with market insights to determine which product categories have the opportunity for growth or which ones to de-prioritise for the new season.
Six important factors to consider when developing a product range:
An overview of styles: fulfils the overarching theme of the collection and in keeping with your brand aesthetics.
Assortment mix: ensures that the right category mix and variants meet sales forecast or OTB plan (open-to-buy), while staying relevant for the season and in the market.
Material composition: informs seasonality relevance and determines the cost of goods.
Selling price: justifies the pricing architecture that optimises profit margin while meeting consumer demands and remaining competitive in the market.
Financial metrics: calculate cost and gross margin percentage per SKU, or commonly known as intake margin.
Production lead time/delivery time: accounts for newness launch phasing and seasonality.
Most merchandisers would utilise a spreadsheet template to create the range plan which includes preset formula in the cells to calculate intake margin.
By reviewing past season’s performance and comparing against sales forecast for the new season, identify the key performing categories and then narrow down to the number of SKUs for each category.
To arrive at the optimal number of SKUs for the new season, you will need to account for fashionability contribution between Core versus Seasonal SKUs, as well as to consider repeating existing bestsellers with seasonality relevance. To validate the latter, it is important to refer to competitors’ activities. If you have been consistently monitoring competitors’ assortment mix, you would be able to make sound decisions to address missed opportunities experienced in previous seasons and avoid repeating mistakes.
Key information to include in a range plan
Assortment SKU Count by Category and by Style
A fundamental part of getting the right product range is ensuring that the optimal number of SKUs meets sales forecast, and the breakdown by category/sub-category is commercial as well as representative of your brand positioning.
For example, Zara and Uniqlo are two leading retailers with different brand propositions. As a more fashion-centric retailer, Zara’s top categories include Tops, Dresses, Outerwear and Co-ords whereas essential-focused Uniqlo has basic Intimates and Accessories in its top five categories.
Deep diving into Tops’ sub-categories, T-shirts make the bulk of the offering at Uniqlo with minimal SKUs allocated for the other styles. Meanwhile, Zara has an equally high concentration of Shirts and T-shirts, alongside more fashion-forward styles such as Crop Tops to suit the retailer’s target consumers.
For every collection, it is important to get a mix of seasonal/trendy colours and core colours right.
Zara’s colour palette differs greatly across the seasons. For its spring/summer collection, core colours like black, white and grey contribute to the majority of the mix but we also see a significant number of SKUs dedicated to seasonal colours such as blue, pink and yellow. A huge contrast is seen in the fall/winter collection, where core colours and brown make up more than half of the palette.
All the materials and fabrics required for each SKU should be stated in the range plan to guide the sourcing process. Maximising the materials and fabrics used, especially prints, is a key step to avoid MOQ (minimum order quantity) dispute with the suppliers, reduce wastage and achieve cost efficiency.
Having this information ensures that the volume drivers and Core SKUs are protected and not overlooked.
The costs in the range plan should include the cost of all materials, production and logistics. If the cost for an SKU is too high, your intake margin would be affected. Therefore, it is critical to be strategic with the construction of designs and the usage of materials.
Retail Selling Price
The selling price should adhere to the pricing strategy formed for the season.
Zara follows a tiered pricing ladder which maps out its selling prices against fashionability attributes. Core products fall under $30, fashion items are priced at under $60 and premium designs or highly seasonal items are priced at under $100.
The margin calculated in the range plan is gross margin, which is the difference in selling price and cost of goods divided by the selling price to understand how much profit will be generated. Calculating the margin within the sheet itself is important as merchandisers will adjust the cost accordingly. Typically, merchandiser would want to maintain an “ideal” margin that allows for future markdowns.
Sizing grid shows the variation of size, each SKU will be offered in. Depending on the design and fit of the SKU, some SKUs may require more or fewer size variations. This information is especially important to inform the manufacturers to avoid costly mistakes.
Quantity indicates the number of units per SKU to be ordered. This number should be guided by your OTB budget.
Range planning for visual merchandising
Range planning also sets the foundation for distribution, especially for store allocation and store cluster levels. Intertwined with the demand planning and visual merchandising processes, the range plan is a key planning document for selecting which products actually end up on the shelves.
Executed by the visual merchandisers, a range plan is commonly referenced for window display and throughout the store, highlighting must-haves or key looks for the season.
The range plan can also guide the creation of pages for online visual merchandising. New arrivals on the homepage typically showcase the seasonal collection, as translated from a range plan.
Another common trick used for online stores is to place similar products within clusters on the product page. For example, when you are scrolling through the women’s category, you’ll see similar-looking dresses being placed next to one another. The placement of the products and description/information of the SKUs on the product page will be done in reference to the range plan.
Range planning is a key discipline in merchandising. A range plan is a valuable tool used by merchandisers, designers and buyers to inform the next season’s collection and potential margins before committing the order to the factory.
The range plan also aligns the merchandising, buying, design and manufacturing processes, and set the design and financial directions of the collection. Ultimately, effective range planning ensures that the assortment you’ve built has a higher chance of sell-through and profitability.
Sufiana Sharuddin is a published fashion writer, honing her interest in the industry during her time at Condé Nast College of Fashion and Design. She currently covers a variety of topics within the industry including business, technology, trends and current affairs.