Size curves, also known as size breaks, define the ideal ratio between different sizes of a Color Choice or a style. This ratio is critical to get right while placing orders for a product. Retailers often use ratios, such as 1-2-2-1 (for XS-S-M-L) without taking demand or historical sales into account, which can lead to stocks-outs on certain sizes and excess inventory on others.
Before diving into the different ways of calculating Size Curves, let’s introduce a few more terminologies:
Size Scale (same as Size Run) determines the possible combinations of different sizes for a given Color Choice.
Size Run Breaking means running out of stock on one or more of the sizes in a Size Scale.
Three approaches to generating a Size Curve
1. Calculating the ratio between Sales Units
The most common approach for calculating a Size Curve is by looking at the number of units sold per size for a given Color Choice within a specific time frame. This is widely used because it is the simplest way to calculate the Size Curve.
To provide a quick example of this approach, let’s say that the sales for a White T-Shirt during a certain time period is as follows:
By looking at the % of TTL (i.e. percentage of total) for each of the sizes, we can gather the Size Curve we should leverage when placing our next Purchase Order.
There are a few pitfalls with this approach. First, this approach does not account for the fact that some of the sizes might be sold at a markdown (think of the end-of-season promotions on fringe sizes). Secondly, it may not incorporate the stock-outs that might have happened which could lead to a missed sale and an inaccurate reflection of true demand. Therefore, this approach will overestimate the demand on the sizes that do not sell well.
2. Calculating the ratio between Sales Retail
To avoid the impact of units sold at a markdown, we can instead look at the Sales Retail value, and calculate the % of TTL. As you can see in the chart below, this results in a slightly different and more accurate Size Curve. By comparing the revenue generated by size instead of units sold by size, we have improved the accuracy of our Size Curve.
Even though this is a better approach, this still doesn’t account for the impact of demand for units that may have experienced stock-outs. To calculate the Optimal Size Curve, we need to leverage a slightly more complicated approach.
3. Optimal Size Curve generator
To calculate the Optimal Size Curve, we must look at the ratio of sales between our sizes on what we call Good Weeks, which are defined as weeks when each size is known to be in-stock and there are no promotions (markdowns or discounts) on any of these sizes.
This approach requires more effort to gather the necessary data. However, it yields to the True Demand for each size, and as a result, the Optimal Size Curve.
How to calculate the Size Curve for a Color Choice with no history
The approach above works well for Color Choices with sales history. However, oftentimes a retailer will introduce new Color Choices into their product mix and will not have any sales history to rely on. In those cases, a common approach is to determine a “like-for-like” or similar product, and use the Size Curve information from these products. While selecting the like-for-like product, it’s critical to choose products with as many common attributes as possible, such as price-range, color, fabric, silhouette, etc.
Free Size Curve Generator
To help you streamline the Size Curve generation process for your business, we have created a Free Size Curve Generation Template. To keep things simple, this tool relies on the Sales Retail based approach of calculating the Size Curve. Below are the steps to use the Size Curve Generation template:
1. Import your sales data into the Input Tab
Make sure to match the header names before importing your data.
2. Apply the appropriate filters on the Output Tab
Make sure to apply the appropriate filters to get to the Size Curve for a specific Color and Category.
3. Use the Output Size Curve in your next Purchase Order
Now use this Size Curve to determine the optimal number of sizes to order when you place your next Purchase Orders!
How often should you recalculate your Size Curves?
Ideally, Size Curves should be re-calculated in each Order Cycle, i.e. each new round of Purchase Orders being placed. The demographics of a retailer can change often as they constantly acquire new customers and old ones churn. Therefore, using up-to-date data is the most reliable.
Calculating and recalculating Size Curves can be a very cumbersome and error-prone process. Item Planning software like Toolio can you help automate this process and help you ensure you have the right products in the right color and sizes which leads to increased top-line sales and profitability. If you’d like to learn more about how Toolio can help you automate your processes, schedule a demo with our team today!