Spotting Category Opportunities in Assortment Planning

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Pre-Season Planning
Spotting Category Opportunities in Assortment Planning

In today’s fashion landscape, where seasonless is the way forward, highly curated category assortment is more important than ever. The ‘buy now, wear now’ shift is evident, as consumers start to value personalised products that resonate with their values. 

Yet, when category assortment planning, fashion brands are still highly reliant on internal historical data.

Simon Collins, former Dean of Parsons School of Design, explained that the “overreliance on calculations” in the merchandising and buying processes has led brands to grow accustomed to buying based on what has worked in the past, without considering target markets.

But historical data doesn’t only mean missed opportunities, it is also rendered obsolete after Covid-19 struck the globe. Your numbers last year will no longer be indicative of future performance – and this is why, more than before, market insights are so crucial. 

Looking inwards only paints half of the picture. Without external market insights, you’re prone to blindspots – areas, where you didn’t even know, existed: 

  • Inability to drive consistent sell-outs from bestsellers: You often repurchase based on previous bestsellers, but over time, consumers’ taste will shift, and you miss out on rising key trends. 
  • Hidden underperformances: A product in your latest collection is selling really well, but unbeknownst to you, it only achieved half of what your competitor did. 

High Market Visibility Aids in Effective Category Assortment Planning 

To build a category assortment that resonates, brands must look towards market demand. Understanding the relationship between your own category offerings and performances, along with market trends, helps you to focus on offering key categories relevant to your customers. 

One of the ways to build an effective category assortment is to perform a quarterly categorical review every three months, which helps you to… 

  • Bridge the gap between brands and external competition 
  • Understand competitors’ assortment offerings across market
  • Identify category opportunities relevant to market demand to maximise sales 

Here are the key steps: 

Step 1 – Review Own Brand’s Top 3 Categories

Your category performance report aids in reviewing category performance with key indicators such as:

  • Sales mix
  • Stock mix
  • Cover (by week/month)
  • Performance vs last year
  • Performance vs planned sales mix

Here are some considerations to take into account when viewing the report:

  • What are the brand’s core drivers?
  • How are the categories’ sales and stock performance? Are they overperforming or underperforming, overstock or understock? 
  • How is each categories’ weekly or monthly cover trading vs. total brand average? 
  • How is each categories’ performing vs last year and vs planned sales mix?

Understanding your own brand’s categories’ sales and stock performance helps in identifying your own brand positioning.

Step 2 – Identify Competitors’ Top 3 Categories 

The next step is rarely performed by brands, as it involves looking towards market insights. Here, you need to research your competitors’ performance and positioning in the market in terms of category assortment. 

We’ll be analysing fast fashion brands’ category assortment in the UK market to identify each competitors’ top three categories in terms of SKU offerings.

Here, you’d need to spot similarities and differences across categories offerings. Unsurprisingly, the core apparel category for Topshop & River Island were similar: tops, dresses and outerwear.

Spotting Opportunities for Category Assortment: Topshop vs River Island
Image Source: Category composition of Topshop and River Island for apparel

The top three categories registered a higher sell-out vs. the average, which further proves the decision to focus on these categories.

Image Source: The top three categories of Topshop and River Island

From here, we can now deep dive into the subcategory level to take an in-depth look at allocating resources to maximise category potentiality. 

Let’s use the category dresses as an example. 

Step 3 – Validate Subcategory Opportunities By Sell-Out Rates

After spotting category opportunities in step two, the next step is to validate them by comparing their sell-out performance against the average total sell-out. 

Image Source: Topshop and River Island’s subcategories performance for dresses

Here, even though shift dresses had the highest total products, a-line dresses and shirt dresses had a higher total sell-out rate. 

With this information, you can accurately plan your assortment and prioritise both subcategories. Conversely, this gives you the opportunity to cut the budget for underperforming ones, like bodycon dresses and shift dresses. 

Key Takeaways

Customers are expecting highly edited assortment, and fashion brands must get the essentials right. Looking at external data is important in establishing your own brand positioning in the market. 

In summary:

  1. Understand own brand category assortment to identify strengths and weaknesses in product offerings.
  2. Study competitors’ category assortment to fill in the potential gaps. 
  3. Validate category opportunities by adopting the market’s best-selling assortment to meet consumer demand.