Product range planning (assortment planning) – why is it so important?

Which factors need to be considered in product range planning?

A well-structured product range is more than just variety: it is a key success factor for sales, customer loyalty and efficiency in both physical retail and e-commerce. Retailers who plan their assortment strategically can target customers more precisely, reduce costs and stand out from the competition.

A well-organised shelf enhances the attractiveness of the range – for several reasons:

• Sales promotion: A structured shelf arrangement creates a pleasant atmosphere and increases dwell time.
• Clarity: Products are easier to find and compare.
• Visibility: Order and placement highlight product benefits more effectively.
• Ease of maintenance: Retailers can keep tracking more easily and make quicker adjustments.

Careful range planning also helps to identify trend products earlier, sharpen brand perception and improve internal processes. It is essential to review the assortment continuously and remain flexible in responding to market changes.

How is a product range structured?

In merchandising, a product range includes all goods (items) offered by a retail company. The different sections of the assortment are referred to as merchandise categories. The structure consists of the merchandise area (category group), the product category (subcategory), the product type (item group), the article (range group) and the variety (smallest unit).

A range pyramid can be used to visualise the structures and interconnections within the assortment. This serves as a basis for decisions such as whether products should be added or removed.

In terms of product variety, criteria such as range dimensions, width, and depth are also important.

What are product range structures?

The product range structure describes the systematic organisation and categorisation of all products within a company. It is the foundation for effective range planning and strategic decisions – including in marketing.

Before the product assortment is finalised, it goes through a cycle consisting of the phases of product development, market introduction, maturity, saturation, and decline. Retailers navigate this cycle to adapt their offerings to changing market requirements and customer preferences. Initially, the assortment is in the test phase – new to the market. Once established, it becomes a trend range. It then moves into the saturation phase as a standard range. Finally, it enters the degeneration phase and is gradually withdrawn from sale.

Overview of different product range structures

Core and permanent range

The permanent range includes all product groups, articles, and varieties that are permanently stocked and form part of the standard offering within a sector. It is divided into the core and supplementary range. The core range is offered year-round and usually accounts for the main turnover of a business. For example, pens and folders form the core range of a stationery shop.

Supplementary and additional range

The supplementary range includes products that strategically complement the core assortment. These items are often closely related to the main offering, enhance customer benefit and improve the shopping experience. The additional range extends the assortment with situationally demanded items, such as wrapping paper or mugs in stationery retail. While these products contribute less to turnover, they play important strategic roles, such as cross-selling potential.

Seasonal and promotional range

The seasonal range consists of products offered only at certain times of the year or for special occasions – such as Christmas, back-to-school or the gardening and barbecue season. Demand arises from external conditions or cultural traditions.

The promotional range covers products offered temporarily, typically during promotions or themed weeks, frequently with special price offers.

Strategies for adjusting the product range: Diversification, differentiation & rationalisation 

Range diversification

The aim of diversification is to broaden the range, reach new customer groups and offset sales risks. There are three types:

• Horizontal diversification: new product groups on the same level of the value chain (e.g. a café alongside supermarket products)
• Vertical diversification: upstream or downstream products within the value chain (e.g. blank cards in addition to greeting cards)
• Lateral diversification: products unrelated to the existing range (e.g. leather goods in a jewellery shop)

This strategy has great potential but requires careful planning, as it ties up resources and complicates internal processes.

Range differentiation

In contrast to diversification, differentiation focuses on the depth of the range. Existing items are modified to create variants – functionally, visually or in quality.

• Horizontal differentiation: e.g. new colours or designs for established products
• Vertical differentiation: e.g. a higher-quality version of the same product

Advantage: more precise targeting of different customer groups. But: too many variants can overwhelm or cannibalise one another.

Range rationalisation and specialisation

Here, the focus is on reduction: products that are no longer in demand or do not fit the profile are removed. Triggers may include changes in customer behaviour, new legal requirements or innovation-driven competition.

The aim is a focused assortment with clear positioning, more efficient stock management and lower operating expenses – even if short-term losses occur.

Product limitation: why less is more

A successful assortment is not only about expansion but also about making clear decisions to delist products. Items with low demand incur storage costs, reduce clarity and block space for stronger sellers. Regular analysis is therefore essential.

Artificial intelligence (AI) can provide valuable support. From predictive analytics for personalised recommendations to cluster analyses for better stock planning or sentiment tools for pricing and placement – AI supplies objective data on which faster, more informed decisions can be made. Chatbots can also assist, e.g. in generating ideas for expanding or optimising the assortment.

Stephan Knecht, owner of retail consultancy Fleet40, identifies ChatGPT as an effective tool for range planning:

Range variation and innovation

Range variation, also called product modification, means the targeted further development of established products without changing the scope of the range. Common forms include new colours, improved materials or additional functions. The aim is to better meet customer needs and extend product life cycles.

Range innovation, by contrast, introduces entirely new product groups or items. A distinction is made between:

• Market innovation: the product is entirely new to the market and added to the assortment.
• Company innovation: the product is new to the company but already established on the market.

Both require a structured development process – from idea generation and feasibility checks to market launch. Success depends on close coordination between purchasing, marketing, and sales.

In physical retail, shop windows, promotional areas and seasonal highlights play a key role. Concept presentations such as the special show “Ms Paper & Friends” demonstrate how unusual combinations can create attention. 

Curator and expert in product presentation Angelika Niestrath explains in the interview:

Decorative elements such as lighting, materials or targeted colour schemes guide the gaze and drive sales. Claudia Herke of Stilbüro bora.herke.palmisano advises: “A valuable guideline for decoration and product composition is the multifaceted interpretation of the colour chart.” The goal is to provide impulses without overloading the assortment.

In e-commerce, the product range should also be presented attractively, inspirationally and in line with the brand: high-quality images, videos or 360° views along with consistent descriptions create a seamless shopping experience – across channels and emotionally engaging.