Retail Planning Process Guide

Retail is a dynamic and complex industry: product launches are increasing, promotional pressure is high, and turnover is split across multiple locations and channels

Retailing is the buying of products from manufacturers, wholesalers or large wholesalers and reselling them to the end consumer. Retail organizations vary in size. They can be a single store or a chain of stores consisting of many branches, including department stores, specialty stores, discount stores, and consumer cooperatives.

The biggest problem retailers face is getting the right product mix with the least possible stock level, but doing so means maintaining a complex balance that does not allow for errors. In addition to the cost of holding, high inventories can be the start of a process that forces the retailer to make discounts, while insufficient inventory can lead to lost sales and loss of customers. This balance has gained importance in recent years due to the fact that it has become more difficult to achieve customer satisfaction, the competition has become tougher and the pressures of the investors on the operating costs.

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Retailers need a much more detailed planning management based on demand and forecasts in order to compete in today’s market conditions. These solutions have to cover all retail planning processes such as merchandise management, purchasing, assortment management, distribution and replenishment. The aim should be for retailers to have the right product, at the right price, at the right time, in the right store, in the most effective way in line with their strategic goals.

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However, there are several obstacles to establishing an ideal retail planning system, primarily retailers use largely information-based forecasting methods rather than detailed, analytical forecasting methods, and often forecast demand for strategy rather than making strategic plans for demand.

Another obstacle to creating an advanced retail planning system is that most purchasing decisions are made by instinct and classical methods, analytical approaches are rarely used to find the ideal product mix for market demand.

As a result, very few retailers currently create a purchasing and assortment plan using point-of-sale (POS) data or manage an effective distribution and supply process. For example, there are many retailers that do not have systems to determine whether suitable products and sizes go to eligible stores. There is a wide product development area for IT companies in the retail industry, but the systems developed must be flexible, adaptable to the retailer’s workflow and produce solutions for individual needs.

Retail Reports

Retail reports are a major economic indicator and reflect statistics obtained from thousands of retail outlets and food service entities.

Consumer spending can account for two-thirds of GDP; Therefore, retail is an important driver of the economic health of a nation.

What should the planning process be like?

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Must be analytical

Many retailers plan with a basic logic based on past data and experience, but in today’s world, they have become unable to respond to so many new products and different customer expectations in this way. Retailers adapting to this situation have turned to much more scientific and analytical analysis tools. These tools create a usable data set by bringing together many factors such as customer profile, store type, store location, weather and product features.

Manage complexity

Every time a new function is added to the planning system, an increase in complexity is expected, but the system should have interfaces that will enable focusing on common goals and hide the complexity. In addition to easy-to-understand summary reports, it should have warning systems that will enable quick response. It should also be able to produce reliable predictions and generate warnings for future situations based on the predictions.

Must be dynamic

With each new data, it is necessary for retailers to update their plans and forecasts, their planning processes to be dynamically accepted and updated with changing conditions. In order for these updates to be effective, it is important to restructure the processes in a way that will reveal the results in a very short time for changing plans.

Must be traceable

Planning processes need to be in close association with the supply chain, knowing how changes in plans will affect the elements in the supply chain will be very important for the applicability of the plan. For example, when making your plan, it is necessary to monitor whether you have sufficient supplier capacity, whether you have a network to store and distribute these products, and whether you have sufficient sales channels. In fact, this is the most important data that the planning process creates for other processes, so that resources can be used more efficiently and an effective purchasing and logistics management can be made.

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Retail Planning Process Guide