How to build a merchandising function from scratch

Most fashion brands build their merchandising function too late. By the time the problem is obvious such as excess stock, broken size ratios, a buy that doesn't reflect what's actually selling, the damage is already done. The season is underway, the commitments are made, and the options are expensive.

For most of my career I was hired either during significant restructurings or to build the merchandising and planning function from scratch - most recently at Toteme, where there was no function, no process, and no tools when I arrived. This post is the guide I wish existed when I started: what to build, in what order, and why the sequence matters as much as the structure itself.

First: understand what you're actually building

Before you hire anyone or buy any software, it's worth being clear on what a merchandising function is actually supposed to do. At its most fundamental, it exists to answer three questions: what should we make, how much of it should we buy, and where should it go? Everything else, the team structure, the tools, the processes, the reporting cadence is in service of those three questions.

A merchandising function that works well sits at the intersection of creative direction, commercial performance, and supply chain execution. It talks to design at the beginning of the season and to retail, wholesale and e-commerce at the end of it. It holds the range plan on one side and the OTB on the other. It is, in the most literal sense, the connective tissue of a fashion business.

That's why building it properly matters so much. A weak merchandising function doesn't just affect the numbers, it affects the creative process, the customer experience, and the confidence of every team that depends on good commercial decisions to do their own work well.

The four stages of building a merchandising function

In my experience, building a merchandising function from scratch follows a broadly consistent progression, regardless of the size or stage of the brand. The stages don't always have clean edges, you'll often be working on two simultaneously, but understanding the sequence helps you prioritise.

Stage 1 - Get the data in order

Before you can plan, buy, or allocate intelligently, you need to trust your data. This sounds obvious but it's the step most brands skip and it's the reason many merchandising functions produce consistently wrong outputs despite technically having the right processes in place. Start here: do you know your sell-through rate by category, by style, by channel? Do you know your size ratios? Do you know your weeks of cover? Do you know your stock turn? If the answer to any of these is "sort of" or "it depends on which report you look at", fix the data before you build anything else. A merchandising function built on unreliable data will make expensive decisions with great confidence.

Stage 2 - Build the planning architecture

Once you trust the data, you can build the financial planning framework. This means an OTB model ideally broken down by category, season, and channel that connects your sales plan to your intake commitments and your inventory targets. It means a WSSI (weekly sales, stock and intake) that you review regularly rather than quarterly. And it means a merchandise financial plan that gives the business a forward view of what's coming in, what's expected to sell, and what margin you're planning to achieve. This doesn't need to be sophisticated software at the start, a well-built Excel model will do more than most brands need at the early stage. The sophistication comes later, once the logic is right.

Stage 3 - Define the range planning process

With financial planning in place, you can build the collection brief: the commercial framework that defines the shape of each season before a sketch is drawn. How many options by category? What's the price architecture? What's the ratio of newness to carry-over? What fabric mix does the margin support? This is where collection merchandising connects to the creative process, and it's where most brands have the biggest gap. The collection brief should be a living document that the merchandising team owns, that design and buying work from, and that gets updated as the season develops. Getting this right early changes the quality of every creative and commercial conversation that follows.

Stage 4 - Build the in-season trading rhythm

The final piece is the operating cadence, the weekly and monthly rhythm of reviews, decisions, and actions that keeps the business trading well in season. This means weekly trade meetings with clear ownership, a read-and-react process for newness in the first four to six weeks, a markdown and promotion framework, and a replenishment policy that keeps the right product available at full price. This cadence is what separates a merchandising function that works in theory from one that actually improves commercial performance in practice. It's also the hardest thing to build (and my VERY favourite, I just love a good trading and replenishment process, this is where the real heat is) — because it requires the whole business to adopt a new rhythm, not just the merchandising team.

Who to hire, and in what order

The hiring question is where most brands get this wrong. The instinct is often to hire junior, an allocator, a merchandising assistant, because the immediate pain is operational. Stock isn't in the right place. Replenishment isn't happening. The day-to-day is breaking.

That instinct is understandable but counterproductive. Junior hires can execute a function that already exists. They can't build one. And if the first person you hire is junior, the function they build will be limited by what they know which, by definition, isn't much yet.

The right first hire is a senior one. Someone who has seen how this is supposed to work and knows what good looks like, who can assess what's missing, who can build the tools and processes rather than just use them, and who can eventually hire and develop the team beneath them. That person is more expensive. They're also the only hire that actually solves the problem. And this is exactly why I said yes to the Toteme role in the first place - because the logic from the CEO for hiring me first as the most senior was sound.

A junior hire can execute a function that already exists. Only a senior hire can build one that doesn't.

Once the senior hire is in place and the foundations are established - usually six to twelve months in - the hiring sequence typically follows the same logic regardless of brand size. A planner or merchandiser at mid-level comes next, to share the analytical load and own specific categories or channels. An allocator follows, once the replenishment and allocation logic is defined well enough to execute. And then the function scales from there, based on the complexity of the business rather than a predetermined org chart.

The tools question

Every brand at this stage asks the same question: what system do we need? The honest answer, which most software vendors won't give you, is: probably less than you think, for longer than you expect.

I've worked with TXT/Aptos, Board, SAP and various bespoke planning systems, and I've built planning functions in Excel that outperformed brands with enterprise software because the logic was right and the data was clean. System sophistication matters but it matters much less than the quality of thinking behind it. A well-structured Excel model with reliable data will tell you more than a poorly configured planning system with inconsistent inputs.

The general rule: invest in the right system when your existing tools are genuinely limiting your ability to make better decisions, not before. For most brands, that moment comes somewhere between £50m and £100m in revenue, or when the complexity of managing multiple channels and markets makes manual processes genuinely unworkable. Before that threshold, the investment in fixing the data and building the right logic will return more than the investment in new software.

The most common mistakes — and how to avoid them

After building this function from scratch and working inside several more, the mistakes that come up most consistently are worth naming directly.

Building the function in isolation

A merchandising function that operates separately from design, buying, marketing, retail, wholesale, and e-commerce is a reporting function, not a commercial one. From the first day, the merchandising team needs to be present in the creative conversations, the buying meetings, the trading reviews, the marketing planning workshops. Integration from the start is what makes the function influential rather than just informative.

Underestimating the change management

Building a merchandising function isn't just a hiring and systems exercise, it's an organisational change. Other teams have to change how they work, what information they share, and how decisions get made. That change will face resistance, sometimes from people who feel their autonomy is being reduced. The most effective way to manage it is to be transparent about why the function is being built and what it will make possible not just for the business, but for the teams it works alongside.

Optimising for the wrong metrics

Sell-through and margin are the obvious metrics for a merchandising function to own. But optimising purely for these in the short term can produce decisions that damage the brand in the medium term: over-markdowning to hit a sell-through target, or cutting depth on new product to protect margin, in ways that undermine the customer experience and the creative ambition. The right metrics framework balances short-term commercial performance with longer-term brand health indicators.

Waiting too long

This is the most common mistake of all. Most brands build their merchandising function a season or two after they should have. By then, the habits are formed, the processes are improvised, and the cost of the gap is already in the P&L. The right time to build this function is earlier than feels necessary because by the time it feels necessary, you're already behind.

If you're a founder or commercial leader reading this and recognising your own brand in any of it - the improvised buying, the end-of-season surprises, the creative-commercial tension that never quite resolves - the good news is that it's fixable. The function can be built at any stage. It just gets more expensive to fix the longer you wait. If you'd like to talk through what this might look like for your brand specifically, get in touch.