Customer-Centric Assortment Planning

In the last article of this series Mastering Assortment Planning & Merchandising Strategy we explored how balancing Breadth vs. Depth is the foundational decision in any assortment strategy — one that shapes inventory productivity, customer choice, and supply chain efficiency. But knowing how wide or deep to go isn’t enough on its own.

You also need to ask: “Wide and deep for whom?”

This brings us to the next essential layer: Customer-Centric Assortment Planning — the process of aligning your product mix with real customer behavior, preferences, and local needs. Because the most productive assortment is the one that feels designed just for them.

Aligning Product Mix with Shopper Expectations

In today’s retail environment, customers aren’t just buying products — they’re choosing experiences. They want relevance, convenience, and personalization. They expect brands to anticipate their needs before they even express them.

This makes one thing clear:

A great assortment isn’t defined by how much you carry — it’s defined by how well it reflects your customer.

In this second article of the Assortment Planning & Merchandising Strategy series, we focus on what should sit at the very core of your assortment decisions: your customer.

Let’s unpack what customer-centric assortment really means, how to put it into practice, and what it takes to get it right.

What Is Customer-Centric Assortment Planning?

Customer-centric assortment planning is the process of aligning your product mix with customer segments, preferences, shopping behavior, and regional needs.

It’s a shift from asking:

“What products do we want to sell?”

To asking:

“What products will our customers most likely buy here, now, and often?”

This mindset moves planning from SKU-first to customer-first, ultimately driving:

• Better product relevance

• Higher sell-through

• Increased loyalty

• Lower markdowns

Why It Matters?

Traditional assortment planning often relies on historical sales and gut feel. But in an omnichannel, data-rich world, that’s not enough.

Today’s customer is:

• More informed: They research, compare, and expect tailored options.

• Less loyal: They’ll switch for relevance, value, or availability.

• Channel-fluid: They shop in-store, online, curbside, and everywhere in between.

A customer-centric assortment strategy:

• Anticipates needs by region, lifestyle, or behavior

• Captures unmet demand and prevents stockouts

• Reduces overstock of irrelevant products

• Strengthens customer trust and connection

Key Steps to Build a Customer-Centric Assortment

1. Define Your Customer Segments

You can’t build relevance if you don’t know who you're serving. Start by segmenting your customer base based on:

• Demographics (age, gender, income, location)

• Behavior (purchase frequency, basket size, time of day)

• Lifestyle/Occasions (workwear vs casual, seasonal vs year-round)

• Channel preferences (in-store shoppers vs online-first)

Use loyalty data, market research, or even POS clustering to develop customer personas that reflect real-world behaviors.

2. Link Segments to Assortment Preferences

Once you’ve defined segments, map their preferences:

This helps determine:

• Which categories to expand or reduce

• What styles, pack sizes, or brands to prioritize

• Which attributes (e.g., sustainable, premium, value) matter most

3. Localize Your Assortment by Customer Clusters

Different geographies = different customers = different product needs.

Cluster stores based on:

• Sales trends (e.g., winter jackets in colder zones)

• Cultural preferences (e.g., festival-specific merchandise)

• Income levels (e.g., high-end SKUs vs entry-level options)

Localization doesn't mean creating hundreds of unique assortments — it means creating a few high-impact clusters that better reflect your customers’ reality.

4. Use Data to Understand Attribute Preferences

Go beyond just “what sold” to why it sold. Analyze:

• Color/Size preferences (e.g., XL sells best in certain regions)

• Style trends (e.g., slim fit vs relaxed fit)

• Material or feature demand (e.g., eco-friendly, waterproof)

This is where attribute-level analytics help surface micro-trends that influence macro success.

5. Balance Core vs Tail Assortment

• Core assortment = consistent bestsellers across most locations

• Tail assortment = region- or segment-specific products

Customer-centric planning balances the two:

• Maintain availability of core items everywhere

• Customize tail assortment for hyper-relevance

This approach allows you to scale while staying locally relevant.

Metrics to Track Customer-Centric Performance

Use the following KPIs to measure how well your assortment aligns with customer needs:

• Sell-through by segment/region

• Assortment effectiveness = % of customer demand met

• SKU productivity by cluster

• Repeat purchase rate for localized SKUs

• Sales lift from tailored assortment vs generic

These insights help validate your strategy and drive continuous improvement.

Red Flags That Indicate You're Not Customer-Centric

• Flat or declining sales in key markets

• High returns or dissatisfaction with products

• Inventory build-up on fringe SKUs

• Stores selling “what’s available” instead of “what’s needed”

• Low overlap between loyalty data and top-selling SKUs

Put the Customer in the Center — Not the Product

Customer-centric assortment planning is not about increasing complexity. It’s about using data, segmentation, and intent to build assortments that speak directly to your customers' needs and habits.

As competition intensifies and shelf space becomes more dynamic — digital or physical —customer-centricity will be the edge that separates retailers who win from those who lag.

In the next article, we’ll explore Localization & Clustering Strategies — how to structure store groups, create scalable regional assortments, and use cluster analytics to reduce assortment complexity while increasing relevance.

Have you tried segment-based or localized assortment strategies in your organization?

Share your experience or challenge in the comments.

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