What is a SKU Plan and Why do I Need One?

When you hear the word SKU Plan what comes to your mind?

If you have any experience working within the fashion industry you’ll know that it’s essentially the Road Map to your collection every single season.

This simple piece of paper that serves as a complete road map as to what you should include in your collection each season is something that can MAKE or potentially BREAK your business.

So what exactly is a SKU plan?

This sheet, which I like to use an excel or google sheet to create, consists of a breakdown of either all your styles (if you’re a small company), or categories/merchandising groups (if you’re larger/100’s of styles).

A SKU Plan is basically a way to ensure you’re designing the RIGHT styles that work for your customers each season.

Why is creating a SKU plan so important? 

As a merchandiser for over a decade, I cannot stress important it is to ensure you’re planning ahead for each season.

Whether you are first starting out and you don’t have many sales yet, or you’re a booming business making millions of dollars. The size of your company doesn’t matter. You need to create this document.

The reason this is SO important is...you’ll save money.

What do you mean I’ll save money you may ask. Well, when you create a SKU Plan you’re essentially making a shopping list of everything you need.

Think of this scenario.

When you go grocery shopping without a list of exactly what you need you end up either A) Spending way too much money on a bunch of crap you don’t need or B)forget to buy a bunch of items you need. Heeeloo milk and eggs!

So as silly that may sound, that’s what your SKU plan is. It’s your shopping list for your collection.

what is a sku plan and why do i need one

By building a SKU Plan you’ll create a list of styles you know that your customer will love.

This will save you money in a few ways:

  • You won’t design a bunch of styles that aren’t going to sell (product development is expensive)

  • You can get a clear cut overview of exactly what you need to add or eliminate in order to create your most profitable assortment.

The second reason this is so important to create is that you’ll ensure you’re designing styles that buyers and customers will LOVE.

When you create a SKU plan you want to analyze the styles that are selling well and styles that aren’t selling well.

When you do this you can see a clearer view of what you need to include or get rid of.

The idea is to remember the whole “less is more” concept when it comes to merchandising.

Not only will this create a better edited, well-defined collection for your brand, but it will also help you when it comes time to go into production.

The last thing you want is for there to be multiple styles that you created/designed/spent time on to only be dropped from your collection (meaning no one bought) and you didn’t get even produce.

Here’s an example:

Let’s say you had a slip dress that sold very well, but you also had a wrap dress, a maxi, and a shirt dress for a total of four dress styles.

The slip dress sold 90% of what you sold in dresses.

You also offered three different tops. These styles all performed well across all three styles.

Based on these two conclusions you may want to add more tops to your collection and reduce the amount of dresses you offer.

Out of the four dresses, you weren’t even able to go into production with one because you were nowhere near meeting the MOQ.

BUT, if you only had two or three dress styles, customers orders may have accumulated enough orders for you to justify producing both dresses and even having the ability to negotiate a lower price with your supplier.

This is obviously just an example, but as you can see, once you break down what you sold you can get a better idea of what you need vs what you don’t need.

In a fashion company, this is usually the first meeting of the season that merchandisers have with design. The designers will bring their ideas to the table, and the merchandiser’s job is to ensure that they are covering all their needs for the season in terms of what’s selling well vs what’s not working.

Let’s face it, trends are fickle. What’s in one season can be out another, which is why it’s so important to do your due diligence here.

How to get started

The easiest way to get started with creating your SKU plan is to make a list of all your current styles and how much they sold.

When you are creating any new styles be sure to see where they would fit into your collection.

Make sure you’re not just designing something because you like it. Of course there always a few pieces what we call “loss leaders” (which is a whole other topic), but you get the idea right?

The ultimate goal here is to PLAN ahead. If anything that’s the one key takeaway I want you to get from this blog post.

Plan ahead, make that grocery list and avoid buying a bunch of stuff you don’t need.

And because I know how much you love Checklists, I’ve created a list of the top 10 things you need to do in order to create a basic SKU plan here.