How To Enhance Your Retail Planning Process
By: Rola Losco
An effective retail planning process considers all aspects of business operations. While meeting consumer demand is of the utmost importance, analyzing ROI and cost management are priorities as well. Determining the right products as well as delivering them at the right times and in the right quantities all factor into merchandise planning efforts.
If your business is looking to fine-tune its retail planning process, developing a data-driven strategy can provide valuable insight into these considerations. This article will examine the challenges associated with an accurate demand forecasting strategy and provide insights into the solutions that can optimize your retail planning process.
The importance of accurate retail planning
Many businesses face challenges with their financial planning and analysis (FP&A) efforts. Coalescing analytics and data related to planning, budgeting, forecasting and financial futures often means relying on disparate sources of information. Modeling an accurate retail planning forecast can be difficult when coordinating input from your IT teams, merchandising departments and financial analysts.
If your business is finding that combining all of this departmental information - often created in data silos independent of one another – is difficult, rest assured you’re not alone.
Many businesses are attempting to develop effective merchandise financial planning strategies as part of a larger business architecture. All of these considerations are swirling overhead amidst an attempt to focus on what really moves the needle for your retail planning process: accurately forecasting consumer demand.
Even if you’ve successfully navigated the often disconnected processes and limited cross-channel visibility of your merchant teams, you still have to consider the other half of the battle when it comes to retail planning: the market itself.
Depending on your industry, your products may be subject to a short lifecycle, meaning you need to be on the lookout for what’s next in order to remain competitive among rapidly-changing trends. If your organization has a large distribution chain, you’ve got retailers and regions to consider, each with their specific needs and demographic data points to analyze.
Accounting for assortment planning, costing, allocations, markdowns, receipts management and replenishment across every channel are key considerations that combine to influence your larger retail planning strategy.
Simply put, you’ve got your hands full.
Meet consumer demand and optimize ROI with the right data-driven solution
As daunting as the task may seem, there are ways you can successfully navigate all of these considerations while effectively forecasting consumer demand. Here are some tips designed to simplify and streamline your supply chain planning process:
Combine top-down targets and perform a bottom-up analysis
When it comes to an effective retail planning strategy, you can find value in all of the information presented to you. You’re collecting it anyway, so why not put it to use? Compare and contrast your SKU sales, retail analytics, region performance data and overstock reports with your projection data to gain a better understanding of how your products are performing against predicted forecasts.
Collaborate to finalize annual targets and ongoing forecast revisions
Take advantage of your various departmental teams to gain new perspectives regarding your retail planning process. How is the information from your financial teams interpreted by your IT staff? How does your merchandising department view information collected from customer demand feedback? Taking advantage of all of the resources available to you can help refine your vision while taking their contributions into account.
Once you have your annual targets, convey the data to your teams and challenge them to find pitfalls in your strategy. Break it down by quarter so you can view vulnerabilities with a greater degree of granularity, and pay attention to the compounding effects this could have on your larger annual forecast. These best practices will increase your operational efficiency, and allow your department’s insight into your macro and micro-level strategic plan.
Cascade targets and adjustments down to a SKU/store level.
Here is another example of where a detailed approach can have a larger impact on your overall budget. By drilling down to the store or even SKU level, you can get a better understanding of where your demand truly lies. Even within one specific region, the demand from store to store could be wildly different.
For example, a beverage company may find that one store sells far more of a certain flavor than another. If the retail planning process makes assumptions based on the performance of the larger region itself, the business may be leaving money on the table.
While this may not seem to have a significant effect, compound this over every store in every region and your business could gain a wealth of new insight that affects your product distribution strategies.
Model multiple scenarios to make informed decisions based on growth, gross margins and strategic intent.
Weighing all potential outcomes is a sound retail planning strategy. While it may seem overwhelming, a connected planning tool can actually make this endeavor easy. By structuring your plan to take data based on varying parameters into account, you’ll be able to pivot effectively in the face of changing market conditions.
Building in scenario-based considerations can facilitate this process and provide actionable data that informs your strategy. What happens if you have accrued overstock by Q2? Creating a plan to offer product discounts based on hypothetical yet algorithmically-possible events allows you to take a proactive approach to your planning process.
Let’s use the overstock example. If you predict a shift in consumer demand that results in diminished ROI for oversaturated product levels or excess merchandise, your Q4 plan can be adjusted to consider these mid-year shortfalls and calculate the necessary revenue needed to hit the budget.
Allitix connected planning solution
So, how does your business streamline all of these information channels to forecast consumer demand accurately?
By taking advantage of a technology-based solution that removes the noise. Overcoming the operational challenges of a multi-platform system is easy when you deploy a solution that integrates seamlessly with your existing operational architecture and provides a ‘single source of truth’ for your retail planning process.
Allitix and Anaplan can offer your business this unified approach for the entire merchandise lifecycle. By combining your merchandise and financial planning data into one comprehensive platform, your organization can create and implement models factoring in all of the relevant information.
This integrated effort improves efficiency and focuses merchants on driving higher gross margins and better item productivity. Here’s what you can expect when you partner with Allitix to take advantage of Anaplan’s connected planning solution:
Highly efficient, real-time, omnichannel collaboration between buyers, merchants, planners and even wholesalers. This will eliminate the need for disparate spreadsheets and data silos that can lead to data errors.
On-demand, dynamic, detailed views into category performance. With Anaplan, you’ll spend less time building reports and gathering data from your various departments and channels. This allows your teams to spend more time proactively analyzing plans, making decisions and executing your actionable strategies.
Built-in scenario planning and advanced analytical capabilities to optimize inventory and assortments. With this information, your decision-makers can use all relevant data sources to reveal previously hidden insights.
Connect and manage the entire product lifecycle on one platform with detailed views across receipts, inventory, sales trends and pricing. The benefits of reducing markdowns and lowering inventory levels will have a direct impact on your ROI.
Allitix and the Anaplan solution combine to offer a comprehensive retail planning solution. Large and fast-growing companies have relied on our cloud platform to make informed decisions that result in faster and more effective planning processes.
Carter’s, a large baby clothing retailer, used Anaplan to create a single, connected view of the data, drivers, hierarchies and metrics across their business.
Faced with products that had a short shelf life (3-4 months) and a huge volume of 250,000 SKUs, Carter’s is a large operation with a complex retail planning process. The business needed a solution that accounted for the demands of over 30,000 retailers in order to sell their proposed 850 million items within a calendar year.
With no complete or holistic view of their supply chain or commercial planning processes, the challenge was great. Gathering demand by country, wholesale and retail outlets would allow Carter’s to conduct planning in a way that was configured precisely to match these lofty goals.
Carter’s was up to the task; they simply needed a solution to execute their vision. By deploying Anaplan, Carter’s established a $30 million reduction in inventory and carrying costs, and was able to remove between 10-15% of their excess and obsolete inventory from the supply chain in their first year of partnership.
“(With Anaplan) we have definitely seen an improvement in our ability to forecast capacity.”
-Wade Latham,
Senior Director of Operations,
Carter’s
Anaplan offers a retail planning platform that supports hyperscale models. With the Anaplan platform, you’ll see your business from edge to edge so you can plan with signals down to the transactional level.
Our connected planning resource can give your business the data-driven insights necessary to take the guesswork out of demand forecasting. When you’re ready to reduce the noise, contact Allitix and take advantage of a single source of truth for your retail planning process.