November 11, 2019

How Many Styles is Too Many Styles?

Let's say you have a category, and you have just one style / product in that category.

Then you add a second style / product. Sales rarely double, correct?

But sales increase, so you add a third style. And a fourth. And so forth. Eventually you have 250 styles.

How many styles "should" you have?

It's a difficult question to answer. You have to take into account your inventory forecasting abilities, warehouse availability and costs, product development expense, you name it.

It's not difficult to figure out what happens as you grow. Take all of your merchandise categories, and build a relationship like we see above. A classic "law of diminishing returns" relationship emerges.

You can use the relationship to determine an "optimal assortment size" by category given constraints ... if you can only have 900 styles / products, you can theoretically parse them out by category to grow top-line sales. We used to do this at Eddie Bauer more than twenty years ago, so the concept isn't a new one. But it is one worth thinking about, correct?

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