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Forecasting is a critical aspect of retailing, and yet, there is much confusion about the definition of sales forecasting vs. demand forecasting (as well as their respective benefits and drawbacks). All retailers use some form of forecast to anticipate the future. Without having an idea of how many items you will sell tomorrow, building a successful and lasting retail business is impossible. And yet, Forrester Research found that while 74% of retailers want to be data-driven, only 29% are able to connect analytics to action. This is primarily due to the fact that there is a big difference between using sales to generate a forecast as opposed to using a multitude of factors (including sales) that affect demand. In other words, sales only represent one data point.  Why is this distinction so important? This is because the two methods produce very different forecast accuracies --  which results in the massive gap between those retailers that are flourishing in the digital age, and those that are rapidly sliding into the retail apocalypse. Sales Forecasting Definition Sales forecasting is an approach retailers use to anticipate what future sales will look like by analyzing their sales history, identifying trends, and projecting data into the future. This has been the standard...

22 June, 2020

Price planning is one of the most difficult (and often misunderstood) elements of retailing strategies. A relatively small change in price can have an enormous impact on product demand, and ultimately, your bottom line. “Pricing right is the fastest and most effective way for managers to increase profits.” (McKinsey & Company). That’s why the most successful retailers set pricing optimization as a critical priority. But emulating successful retailers in price planning isn’t enough. Standard price planning strategies (competition pricing, cost-plus, high-low, EDLP, etc.) may cover generic approaches to managing and optimizing price for any given product, but they don’t account for the most critical variables that determine your pricing success. These missing variables (like demand throughout product life cycles, pricing’s impact on demand, internal and external pricing constraints, etc.) ultimately determine how profitable your business is. Retailers who don’t account for these considerations often struggle with profitability. More sophisticated (and successful) retailers have built these variables into their price planning process to maximize their profits. So, what are these considerations, and exactly how do they impact pricing strategy? And moreover, how do you apply this knowledge to increase your profits? Table of Contents:1. Define Your Positioning2. Forecast Your Product Demand, Not Product SalesWhat’s the difference, and why does it matter?What does this mean for price planning?3. Get Granular With Unique...

10 June, 2020
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