Building a Financially Meaningful Language of Merchandise Assortments

The objectives of this exploratory study included identifying functional relationships between the nature of assortments and potential financial performance and proposing financially relevant definitions and related language for assortment planning. The research method was computer simulation of the merchandising process. Results indicated that more diverse assortments are less financially productive than focused assortments. A definition of assortment diversity was developed and an Assortment Diversity Index (ADI) was proposed. Understanding the diversity of assortments in relation to financial productivity may allow merchandisers to be more certain of outcomes when planning assortments. Additional research may further quantify assortment diversity and contribute to a research-based foundation of merchandising principles.