5 Step to Better Retail Planning
Weekly, monthly, and seasonal retail planning is a necessary component to profitability. If you do not plan effectively, you could lose money. With the right open-to-buy tool, however, you can get through all of our planning steps and work toward a more profitable retail chain.
Here are 5 steps to a more profitable planning environment for any type of retail store:
- Leverage historical data – Your historical data should be a huge clue to your financial situation. By looking at historical buying data, you can determine to the precise dollar how much you are spending on each product type, SKU, and product differentiators and you can break this information down by store and region. This is critical information to understanding your investment in merchandise.
- Analyze sales and inventory data – Once you’ve collected the necessary information you’ll need to analyze it to determine if you’re spending too much on merchandise, buying the wrong type of merchandise for your clientele or spending too much on specific merchandise. Are you buying what your customers want? Are there holes in your inventory? You can determine a lot just by looking at the right data.
- Forecast stock ratios – A proper analysis should lead you to better understand your stock-to-sales ratios. With that, you can generate the proper allocation and replenishment levels for each store and your entire chain.
- Allocate merchandise – Whether you use top-down or bottom-up allocation depends on your retail environment. Either way, you’ve got to ensure each store within your chain has the proper mix of product and the right products for that store’s clientele. You also need to be able to adjust allocations on the fly and by season, if necessary.
- Replenish your merchandise – Once stores run out of product, or get near the end of supply, you’ll need to replenish product supplies. This will be done at a different rate for each product, but you’ve got to be able to judge when to replenish each product and product type so that you always have merchandise on the shelf.
Once you move through this cycle, you’ll go back to the beginning and look at your data again, analyze sales and inventory inputs, and continue tweaking your merchandising and buying procedures until you optimize them. That’s how you make a retail chain profitable.