How do you teach your merchandising team to plan and forecast?

1 Understand the basics

Before you dive into the details of merchandising planning and forecasting, you need to make sure your team understands the basic concepts and terminology. For example, you should explain what is a merchandise hierarchy, a product life cycle, a sales plan, a stock-to-sales ratio, an open-to-buy, and a markdown strategy. You should also clarify the difference between planning and forecasting, and how they relate to each other. Planning is the process of setting goals and budgets for your merchandise assortment, based on historical data, market trends, and customer demand. Forecasting is the process of estimating future sales and inventory levels, based on current data, sales performance, and external factors.

2 Use the right tools

Once your team has a solid grasp of the basics, you need to equip them with the right tools to plan and forecast effectively. Depending on the size and complexity of your business, you may use different types of tools, such as spreadsheets, software, or online platforms. The key is to choose tools that are user-friendly, accurate, and flexible. You should also train your team on how to use these tools properly, and how to interpret and communicate the results. For example, you should teach them how to create and update sales plans, how to adjust forecasts based on actual sales and inventory data, and how to generate reports and dashboards that show key performance indicators.

3 Apply the best practices

In order to ensure successful merchandising planning and forecasting, it is necessary to equip your team with the right tools as well as the best practices. To begin, you should start with a top-down approach and then refine it with a bottom-up approach. This entails planning and forecasting sales and inventory at a high level, such as by category or department, and then drilling down to the lower levels, such as by subcategory, style or SKU. Additionally, you should align your planning and forecasting with your business strategy and objectives. This includes considering your target market, competitive advantage, pricing strategy and marketing/promotional activities when planning/forecasting merchandise assortment. Moreover, you should be realistic and flexible when it comes to planning and forecasting, basing them on realistic assumptions/data rather than wishful thinking or gut feelings. You should also be ready to adapt plans/forecasts to changing market conditions, customer preferences and sales performance. Lastly, you should review/revise regularly by monitoring sales/inventory data frequently and comparing them with plans/forecasts. Identifying gaps or deviations is also necessary in order to take corrective actions if needed. Furthermore, updating plans/forecasts periodically is essential in order to reflect the latest trends/insights.

4 Learn from the feedback

The last step to teach your merchandising team to plan and forecast is to learn from the feedback. Feedback can come from various sources, such as your customers, your suppliers, your competitors, and your own analysis. You should encourage your team to collect and evaluate feedback from these sources, and use it to improve their planning and forecasting skills. For example, you should ask your customers for their opinions and preferences, and use them to fine-tune your merchandise assortment. You should also communicate with your suppliers, and use their information and advice to optimize your inventory and replenishment. You should also keep an eye on your competitors, and use their strategies and performance to benchmark and differentiate your own. You should also analyze your own data, and use it to identify your strengths and weaknesses, and to set new goals and targets.

By following these steps, you can teach your merchandising team to plan and forecast effectively, and help them achieve better results for your retail business.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?