Assortment planning approaches can vary considerably across retailers — and even within individual retailers. Generally, fashion and seasonal merchandise retailers seek to define assortment breadth (number of styles/options) and assortment depth (buy quantity) for each store grouping. Long life cycle merchandise retailers, such as grocers, follow a process that seeks to balance product range with space requirements and inventory availability. Because of these differences, retailers will want to select an assortment planning tool that is suited to both their merchandise mix and planning approach. This is becoming an increasingly important requirement as many large retailers significantly expand their merchandise mix — sometimes outgrowing the capabilities of their current planning system and approaches. SAS acquired Marketmax in 2003, and has since taken the planning suite to version 6, which now includes workflow and forecasting capabilities. The assortment planning solution, formally called SAS Merchandise Assortment Planning, is part of an integrated suite of modules that includes merchandise financial planning, space planning, allocation and in-season management. SAS has brought its strength in advanced analytics to improve assortment planning. Advanced analytic capabilities that are built into the standard assortment planning solution include forecasting that is supplied by the SAS Demand Forecast for Retail capability (enabling forecasting at all levels in the hierarchy). Other optimization modules complement the assortment planning solution, such as size profiling and pre-pack optimization. These modules are built on or complemented by capabilities that SAS has developed, such as its forecast server (the engine behind demand forecasting) and optimization. The use of advanced forecasting and optimization in the assortment planning process is a new capability in the market that is still in the process of maturing. Leveraging the success of price, promotion, markdown and replenishment optimization, planning vendors are now applying the same concepts to the merchandise planning cycle (financial, assortment, space and allocation). It is still too early to determine if the use of advanced forecasting during the assortment planning process leads to measurable improvements, but we expect that the ability to use a combination of forecasts or history will provide planners with more insight with which to make better decisions. 
SAS Retail's Approach to Assortment Planning SAS Merchandise Planning version 6 enables retailers to configure workflows to suit their specific planning approach. An "express" version of the software is available if retailers want a preconfigured workflow to use as a starting point to speed up implementation. The ability to define a workflow will benefit the retailer that is seeking to apply the discipline of process consistency in their planning organization. For example, if the head of planning wants all category managers to review their assortments by price band in food categories, this step can be included in the workflow. Workflow also helps employees who are not familiar with the planning process to get up to speed more quickly. Workflow and approval capabilities enable task assignment, plan submittal, status tracking and plan approval. SAS's assortment planning tool can plan long life cycle items, such as grocery, and seasonal fashion items, such as apparel. The workflows can be configured to match the various planning approaches that are usually required to plan these different types of merchandise. The assortment planning process is initiated with a seed plan that can be generated using historical data, financial plans established during merchandise financial planning, store plans and forecasts (including those generated from the SAS Demand Forecast for Retail capability). Each entity of the seed plan can be based on a different planning metric. For example, sales can be based on a forecast, while store count can be based on a future store count attribute, and space capacity can be based on historical averages. This flexibility in creating the seed plan can help retailers establish an initial plan more quickly. Store clustering is made possible via rules that are based on attributes and sales history/volume groups. SAS also allows retailers to leverage its data-mining capabilities to identify similar selling-pattern stores or groups. Retailers can use both "top-down" attribute/history approaches and "bottom-up" data-mining approaches to suit each merchandise type or clustering approach. The SAS planning suite includes a retail location hierarchy that is used to store full space attributes, including fixture/shelf and product volume/space. As a result, planners have access to space constraints during the assortment planning stage. Space planning and optimization are also part of the SAS planning suite, enabling retailers to achieve tight integration and coordination between space planning and assortment planning. In the area of collaboration, SAS uses the concept of merchandise sets and security access to allow vendors to provide input to and access assortment plans. Planograms can be shared, viewed and changed using the SAS Planogram Collaborator tool. Similarly, stores can also provide input via the same mechanisms. Though many large retailers have centralized their assortment planning decisions, vendors and stores can make assortments more tailored by providing input in the form of attributes (such as store attributes and demographic insight), events (such as hunting season or school start dates) or item suggestions. Financial planning targets are visible throughout the assortment planning process. Planners can adjust their plans throughout the process to meet the goals of financial planning. An automatic reconciliation capability is also available to the retailer seeking a unified plan that will automatically adjust assortment plans to reconcile with financial plans. Visual images can be included directly in the "spreadsheet" columnar display commonly found in assortment planning solutions. This enables planners to get a visual sense of what the assortment will look like while they're planning. This may be particularly useful for fashion or visually important merchandise. Considerations for Retailers Retailers seeking to involve store decision makers in the assortment planning process will need to be prepared to design the workflows, templates and security access to accommodate a more decentralized planning approach. At least SAS has some of the tools required to follow this planning philosophy, but the "out-of-the-box" solution is geared to a centralized planning approach. SAS is planning to improve its space planning and optimization capabilities. In its current version, the assortment planning solution can use space as a constraint, even down to the store level, but planners will need to spend a lot of time planning to a store level. To get store-specific assortment/space plans, a space optimization tool, such as SAS's own Space Optimizer module, will be required. SAS has just released a more fashion-tuned demand forecasting capability (version 4.2). Forecasting fashion is a challenging endeavor for all planning and forecasting software. Most approaches require making "like item" association between a new fashion item and a past item. Retailers with significant fashion items in their mix should keep an eye on how SAS has improved this approach. The SAS Merchandise Intelligence suite, which includes allocation, starts to overlap with "core" merchandising systems. Retailers need to be able to clearly determine how SAS's planning capabilities will integrate and work with their future core merchandising applications. Examples of retailers using SAS Merchandise Assortment Planning include Luxottica, Sainsbury's and Levi Strauss
Retailers should consider SAS if they are seeking at least three of these key requirements:
- A single assortment planning solution for a wide variety of merchandise ranging from food to fashion
- Implementation of more formalized workflows in their planning organization to promote process discipline
- Workflow combined with templates to improve ease of use, especially for newer planners
- A single solution/vendor that spans merchandise planning, assortment planning and space planning
- Advanced forecasting capability in the assortment planning process and throughout the rest of the planning and allocation functions to create a unified forecast source
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