No products in the cart.
30% of retailers are losing a significant chunk of their potential earnings because their product selections aren’t quite right. Retail businesses often select products based on outdated habits, last year’s sales, or a gut feeling. But in today’s fast-moving retail world, that approach can leave a big hole in your profits.
Every item on your shelves or website should be working hard for you, adding value to your business. If it’s not, it could be quietly draining your money. There’s a smarter way to choose your products. By using clear data and a proven strategy, you can turn your product selection into a powerful tool for growth and profit.
Let’s dive into the art and science of building high-performing assortments.
Why Your Gut Feelings Are Costing You Money
It’s easy to fall back on what feels comfortable. For many years, retail buying decisions were made based on instinct, personal preferences, or simply repeating past orders. While experience is valuable, relying solely on these methods in today’s market is like trying to navigate with an outdated map.
As Yay, a fashion business consultant, points out, “Most buying decisions are still made based on habit, historical data, or personal preference. But that’s not scalable. And it’s certainly not profitable.”
This means you might be managing old product lines in a market that’s constantly changing. If you only look at how much you sell overall, you could be missing products that are secretly costing you money, even if they seem to be selling well. These hidden costs can lead to too much inventory in the wrong areas, missed sales on popular items, and a confused brand identity.
The Two Metrics That Will Change Your Business
To truly understand what’s working and what’s not in your assortment, you need to look beyond simple sales numbers. Two powerful metrics can give you a much clearer picture of your profitability and help you make smarter decisions:
1. GMROI: Gross Margin Return on Investment
GMROI tells you how much gross margin you’re getting back for every dollar you invest in your inventory. It’s a simple yet incredibly powerful way to see if a product is truly profitable. If your GMROI is less than 1, it means you’re losing money on that product, plain and simple. It forces you to ask: Was this product even worth buying in the first place?
For example, imagine you invest $100 in a product. If it sells and brings in $150 in gross margin, your GMROI is 1.5. That’s a good return. But if it only brings in $80, your GMROI is 0.8, meaning you lost money on that investment.
2. Sell-Through Adjusted for Margin
Sell-through tells you how quickly a product sells. A high sell-through rate might seem great, but it doesn’t tell the whole story. If a product sells quickly but at a very low profit margin, you might be scaling losses instead of gains. This is where “Sell-Through Adjusted for Margin” comes in. It combines how fast a product sells with how much profit it actually generates.
As Yay explains, “Sell-through tells you velocity. GMROI tells you profitability per dollar invested. You can sell through 90% of a SKU at a 10% margin and lose money. GMROI forces you to ask—was this even worth it?” This means you could have a product flying off the shelves, but if you’re barely breaking even or even losing money on each sale, it’s not helping your business grow.
By focusing on these two metrics, you move beyond guesswork and start making data-backed decisions that truly boost your bottom line.
Finding the Sweet Spot: How to Balance Your Assortment for Maximum Impact
Assortment planning isn’t just about numbers; it’s also an art. The key is finding the right balance between depth (having many units of a few items) and breadth (having a few units of many different items). Too much depth can leave you with piles of unsold goods and heavy discounts. Too much breadth can confuse your customers and dilute your brand’s message, making it harder for them to choose.
Here’s a smart strategy: use depth for your proven bestsellers; the core products that consistently bring in good profits. These are your reliable “cash cows” backed by solid sales data. For new trends, seasonal items, or special collaborations, use breadth. These “discovery” items keep your brand fresh and exciting without tying up too much capital. They should be tested quickly, and you should only invest more in the ones that prove popular.
We saw this in action with a client whose products brought their profit. But they were spreading their buying budget evenly across all product categories. We helped them cut 15% by eliminating their worst-performing items and redirecting those sales to the sellers. This simple change boosted their net profit by 20% and cut returns by 30%. When products are available in the right sizes at the right time, customers are more likely to buy them. That’s where real profit happens.
When asked about balancing fashion risk with profitability, Yay suggests, “Use a test-and-chase model. Launch 10–15% of your assortment as test styles, measure in 2–3 weeks, and double down on winners.” This approach allows you to stay trendy and innovative without risking too much capital on unproven items.
Don't Just Read About It, Solve It.
Reading about these strategies is a great start, but applying them can be challenging. That’s why Yushkova Design hosts free monthly Fashion Business Roundtables. These are interactive, collaborative sessions designed to help you solve your real-world business challenges.
In these roundtables, you bring your specific business problem, and together with industry experts and peers, you work towards actionable solutions. It’s a unique opportunity for real-time problem-solving, networking with other fashion leaders, and gaining expert insights from Yushkova Design’s 30+ years of experience.
Ready to transform your assortment strategy and unlock serious growth? Don’t miss out on this valuable opportunity to get practical advice and connect with a supportive community. Register for the next free monthly Fashion Business Roundtable today!
