Inventory assortment: breadth, depth, and demand

Inventory assortment is the set of products a business offers and the stock held behind each choice. A useful review separates breadth, the range customers can choose from, from depth, the units supporting those choices. Compare both with demand, gross profit, and stock that is not moving before changing the buying plan.

Define breadth and depth before comparing stores

The words are used differently across retail teams. A category manager may use breadth for the number of categories and depth for the variants within each category. A replenishment manager may use depth for units per SKU. Write the definition on the report.

For the worked category below, breadth means distinct offered SKUs, including products with zero sales. Stock depth means closing units per offered SKU. A store can offer the same choices as another store while holding far more units behind them.

Category assortment breadth = Count of distinct offered SKUs

Average stock depth = Closing units / Offered SKU count

SKU gross profit = Net sales revenue − Cost of goods sold

No single measure decides whether the assortment is right. Research by Chernev and Hamilton found that the effect of assortment size on consumer preferences depended on the attractiveness of the available options; a larger range was not universally preferred. See their original assortment choice study.

The business implication is to test whether an additional choice serves a useful customer need. Adding another product and buying more of an existing product are different decisions, even when they consume the same purchasing budget.

The export rows that make the review possible

Start with the product and store assortment list, not just the sales export. A sales-only file drops products that sold nothing, precisely the rows needed to identify unsupported stock depth.

Use SKU identifiers rather than product descriptions to match the files. Retain size, color, or pack variants separately if those are real customer choices. A category total can look healthy while the demanded variant is unavailable.

Keep a consistent gross profit definition. Gross profit margin explains the revenue and cost basis; this review uses gross profit dollars to see which products contribute to the category. It does not treat gross profit as profit after store labor, rent, or other operating expenses.

Worked example: the same choices, different stock depth

A US office supplies retailer reviews a desk organizer category at Kansas City and Omaha for September 2026. Both stores offered every listed SKU throughout the month. For this simplified example, each SKU has a constant realized selling price and unit cost, with no returns, discounts, or availability interruptions.

For each row, revenue is units sold × price, gross profit is units sold × (price − unit cost), and closing stock value is closing units × unit cost. Apply those calculations before grouping by store.

Kansas City's revenue is 120 × 40 + 60 × 50 + 20 × 60 + 0 × 45 = $9,000. Its gross profit is 120 × 16 + 60 × 18 + 20 × 18 = $3,360. Closing stock is 15 × 24 + 30 × 32 + 80 × 42 + 60 × 28 = $6,360.

Omaha's revenue is 90 × 40 + 70 × 50 + 10 × 60 = $7,700. Gross profit is 90 × 16 + 70 × 18 + 10 × 18 = $2,880. Stock value is 30 × 24 + 20 × 32 + 20 × 42 + 10 × 28 = $2,480. The stock quantities sum to 185 and 80, so average depths are 185 / 4 = 46.25 and 80 / 4 = 20.00 units.

Turn the comparison into a buying decision

Both stores have the same breadth. Kansas City's greater depth is concentrated in Oak and Pine, rather than evenly spread. Its Cedar and Maple products generate $7,800 of $9,000 revenue, or 86.7%, and $3,000 of $3,360 gross profit, or 89.3%. Percentages here are rounded to one decimal place.

Pine ties up $1,680 at Kansas City, or 26.4% of its $6,360 stock value, without a sale during the review period. Omaha holds $280 in Pine, or 11.3% of its $2,480 stock value. Those are review flags, not automatic removal rules. Establish whether Pine serves a seasonal need, a contractual range requirement, or a customer group the other products do not serve.

The immediate discussion is about depth: pause an unsupported replenishment, review a transfer, or obtain evidence for the planned stock. Removing Pine from the offered range is a separate commercial decision. A low-sales SKU might still have strategic value, while its current quantity is excessive.

For persistent slow stock, use inventory aging to establish how long specific units have been held. Use inventory turnover for inventory efficiency over time, and inventory reporting to keep the store comparisons reconciled to source totals.

Where it goes wrong

• Treating sales as unconstrained demand. Stockouts suppress observed sales. A field study of stockout costs found effects beyond the current order, reinforcing the need to inspect availability before cutting a range.
• Dropping zero-sales SKUs. Start from the offered list and retain unmatched sales rows as zero only after confirming the period was covered.
• Comparing unlike periods or stores. A launch month, promotion, or smaller selling area can explain a difference. Compare similar exposure before judging performance.
• Calling all margin contribution. Gross profit does not include every variable selling cost. Label any contribution measure with its actual cost deductions.
• Equating zero sales with obsolete inventory. A quiet month is a demand flag. Age, condition, season, and future use need separate evidence.

Review your own assortment file in Covirage

Bring your offered SKU list, store sales, matched costs, and stock snapshot to Covirage. Covirage maps the columns; its tools compute and check the category comparisons, and the external AI model explains the result with every figure traced to its rows. Create a free Covirage account, set up your business, and bring a sample of your own data; creating the account takes about a minute.

See Covirage for supply chain teams for the wider business context.