Retail Dive recently reported that Old Navy had quietly added occasionwear to their product mix.

Affordable occasionwear is saturated by ultra-fast fashion and marketplaces like Amazon. Finding such product in a mall or high street is a little more difficult, especially at an affordable price point.

Old Navy found “The Occasion” to open up a new category.

And, opening up new categories in a product assortment is one method to help evolve the assortment.

It’s one of many tools that merchants have at their disposal.

Because product assortments should evolve in response to changes in market and customer preferences. Stated differently, assortments must be more dynamic than static.

Adding a new category is not the same as evolving the product mix with a color refresh or lengthening the sleeves on a best-selling silhouette. The addition process might need a whole new team, new factory partners or a new skill set.

So, it’s important to follow a process to determine if the juice of category addition is worth the squeeze.

Here is what I would do…

1. Start with customer feedback and insights. Does your customer frequently ask for products or categories that you don’t have? This may be a sign to start investigating. Go ask sales associates and managers if they think customers would buy a new category and start collecting the data.

Old Navy, for instance, uses customer data analytics to track customer shopping trends to uncover popular styles. The information can then be used to kickstart category development.

2. Comp shop the market. This is the best way to find a gap and opportunity in expanding into a new product category. This also goes for collaborations, partnerships and adding relevant brands to an assortment. When researching what the target customer is on the hunt for, Old Navy uses social listening tools to track trends. Most merchants and designers will comp shop to see where their customers are shopping and what they are buying.

3. Take a good look at what’s in your own house. Can your current team support a new category or can you enlist a factory partner to help you co-create? For example, if you are adding home decor to your apparel-dominant store, you may need to outsource private brand design and development vs. hiring a new team. A new team may not be cost-effective if you are just testing.

Gap Inc. has a lot of talent that can be shifted across its sub-brands. The occasion wear edit has dresses, skirts and tops. These categories already exist in the main collection so finding new designers probably wasn’t necessary. Banana Republic, a Gap Inc. sub-brand, also has many occasion dresses. The team has material and product designers that could be punted over to the Old Navy line of business.

4. Test a small product mix before going all in. It might be worth a surcharge and manufacturing closer to home for testing purposes. You have to think, what is the shortest and easiest path to getting a clear answer. Test before committing to huge orders. Zara, Shein, and Old Navy all use quick-turn manufacturing and limited-run collections when testing small batches of products.

By opening up new categories, merchants can keep the assortment fresh and relevant. In doing so, driving full-price sales and improving profitability.