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Home›Services›Merchandise Planning & SKU Rationalization
Operational Advisory — Lake Washington Advisors

Most apparel brands have
too many SKUs and too little
margin discipline.

Assortment planning and merchandise financial planning determine whether capital is working or sitting in dead inventory. SKU rationalization is not about having fewer products — it is about having the right ones, in the right quantities, at the right price points, bought with the discipline that actually produces margin.

Book a 30-Minute Call See the 5Angle Diagnostic
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Principal-led by Shabbir Sharaf — 21 years operating apparel brands with personal capital. Every engagement conducted under NDA.
Engagement Type
Audit + Planning
Duration
60–90 Days
Scope
Discussed on First Call
The Problem

How apparel catalog decisions destroy margin

In apparel, the margin problem is often decided before a product ever reaches a sales channel. It is decided when the buy is placed — how many colors, how many sizes, how many units, at what price point, against what demand signal. Brands that make these decisions by gut end up with catalogs that carry dead weight and trap capital in inventory that will never turn.

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Colorway Proliferation
Six colors when three would have captured 85% of demand. Each color is a separate production run, a separate photo, a separate set of size inventory. The capital committed to colorways 4, 5, and 6 is often the difference between a profitable season and a markdown event.
📊
No Open-to-Buy Discipline
Open-to-buy (OTB) is the financial control that determines how much inventory a brand can buy in a given period without exceeding its working capital constraints. Most small and mid-size apparel brands have never built a formal OTB plan — they buy until they run out of cash.
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Hero SKUs Subsidising Dead Weight
A handful of SKUs typically drive the majority of revenue and margin. The rest of the catalog consumes inventory capital, photography cost, listing management, and warehouse space — at zero or negative contribution. Without SKU-level economics, brands never see this clearly enough to act on it.
🕑
Seasonal Planning Disconnected from Economics
Seasonal buy decisions made on trend instinct rather than on trailing sell-through data, inventory turn rates, and channel demand signals. The result is inventory that arrives at the wrong time, in the wrong quantities, committed to colorways the market does not want.
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Pricing Architecture Misaligned
Price points set by competitive benchmarking rather than cost structure and margin targets. Products that look profitable at the retail price are not profitable after Amazon fees, returns, and PPC are accounted for. The pricing architecture needs to be built backwards from target contribution margin, not forwards from competitor pricing.
📦
Inventory Depth vs. Breadth Imbalance
Breadth (number of styles) and depth (units per style) are competing capital claims. Most brands err toward breadth — more styles, fewer units each — which produces stockouts on winning SKUs and overstock on everything else. The right balance is specific to each brand’s channel mix and demand pattern.
The Methodology

Assortment planning grounded in operator economics.

Merchandise planning is not software — it is judgment applied to data. The judgment comes from operating seven apparel brands across multiple categories, price points, and channels for 21 years. The data comes from the brand’s own sell-through history, inventory turn, and channel performance.

01
Catalog Performance Analysis
A complete assessment of the current catalog — sell-through by SKU, inventory turn by category, contribution margin by style, return rate by product line, and velocity against plan. This analysis tells the true story of which products are working, which are masking a problem with volume, and which are consuming capital without returning it.
Sell-through rate by SKU, colour, and size run
Inventory turn by category and price tier
True contribution margin by style after all costs
Stockout vs. overstock pattern by SKU
02
SKU Rationalisation
Every SKU evaluated against three criteria: financial performance (is it profitable at contribution margin level?), strategic role (does it serve a specific demand or brand purpose?), and operational cost (what does it cost in inventory, photography, listing, and warehouse to maintain?). SKUs that fail all three are exit candidates. SKUs that fail financially but serve a strategic purpose need a plan to fix the economics or justify the cost.
03
Assortment Plan Construction
A forward-looking assortment plan built on the rationalised catalog — defining the breadth/depth balance, the colour and size run discipline, the category mix by channel, and the seasonal introduction and exit plan. The plan is built to produce a specific margin outcome, not to maximise SKU count or revenue.
Breadth vs. depth ratio by category and channel
Colorway and size run guidelines by product type
Category mix by channel — Amazon vs. wholesale vs. DTC
Seasonal introduction and discontinuation calendar
04
Merchandise Financial Plan & Open-to-Buy
An OTB plan that connects the assortment plan to working capital — defining how much inventory can be bought each season without exceeding capital constraints, and building the financial discipline to make buy decisions within those constraints. For brands preparing for exit, the merchandise financial plan also becomes a key exhibit in the data room.
Open-to-buy budget by season and category
Inventory investment vs. working capital reconciliation
Buy decision criteria and approval process
In-season reorder and markdown trigger thresholds
What You Receive

Deliverables from the engagement

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Catalog Performance Report
Full sell-through, margin, and inventory turn analysis by SKU, colour, and category. The honest picture of what is working and what is consuming capital without returning it.
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SKU Rationalisation Plan
Every SKU classified with a specific recommendation — continue, fix economics, or exit — with the rationale and an exit or improvement plan for each. Capital freed by exits identified.
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Forward Assortment Plan
Season-by-season assortment framework defining breadth/depth balance, colorway discipline, and category mix by channel. Built to produce a specific margin target, not to maximise selection.
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Merchandise Financial Plan
Open-to-buy budget, seasonal buy limits, and working capital reconciliation. The financial discipline framework that turns assortment planning into capital allocation decisions.
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Pricing Architecture Review
Price point assessment by SKU tier — built backwards from target contribution margin, not forwards from competitive benchmarking. Specific pricing adjustment recommendations where misalignment is identified.
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Inventory Liquidation Plan
For exit-classified SKUs: a liquidation plan that recovers maximum value without brand damage. Channel options, timing, and pricing strategy for moving dead inventory without creating a bargain-bin signal in the market.

Capital tied up in the wrong SKUs is capital not working.

The conversation starts with 30 minutes and a direct discussion about your catalog economics.

Book a 30-Minute Call
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