In this article, we discuss the importance of retail demand planning for maximising sales, how to do it effectively and the role business finance can play in balancing supply and demand.
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Most retailers have experienced issues with running out of stock or carrying too much inventory. Effective stock control relies on smart systems and processes that help you avoid stockouts and wastage and keep your customers happy.
Demand planning and forecasting are the basic strategies that help businesses predict and meet customer demand. It’s particularly crucial for retail and ecommerce brands aiming to coordinate their supply chain, manage their working capital and operate efficient stock control.
What’s more, if you’re subject to seasonal and market fluctuations, accurate inventory management and forecasting are the difference between riding a wave of high sales or missing out and being left with a mountain of depleted stock to shift.
Effective retail demand planning and forecasting helps you to:
2023 research from Retail Insight revealed that 82% of UK shoppers have experienced out-of-stock products in-store, and 60% online. Hundreds of billions of pounds in lost sales globally can be attributed to stockouts and inventory issues.
Paul Boyle, CEO at Retail Insight, said: “When items are unavailable, hidden, or damaged, the resulting lost sales can be as much as 8% of revenue – an opportunity retailers can ill-afford to lose.”
So, to successfully cater to customer needs and run effective stock control, you need accurate forecasting to inform key decisions. That requires sophisticated forecasting tools and techniques.
Popular demand forecasting methods include time series analysis, scenario analysis, linear regression, moving average demand, demand sensing and collaborative planning, forecasting, and replenishment (CPFR).
These are all useful ways to predict future demand, sales and potential disruptions, based on various data sets and variables.
There are various demand forecasting tools available to help you predict future demand and optimise inventory management, offering analytics and predictive capabilities, many powered by AI.
When choosing demand forecasting software for your retail business, consider the following questions:
Before implementing demand forecasting software, identify your business needs and thoroughly research different software solutions, comparing their features and running through the questions above. Plus, we suggest getting demos and taking advantage of free trials to see the solutions in action and decide whether they meet your expectations.
Understanding supply and demand dynamics in retail allows you to maintain the right inventory levels. Harnessing data is where you can improve your retail demand planning. While your chosen forecasting software will allow you to take a data-driven approach, it requires dedicated monitoring to make the most accurate predictions.
When developing your supply and demand strategies, include the following factors:
This will support you with comprehensive demand planning (armed with modern forecasting tools), incorporating the main influencing factors and strategic considerations, to balance supply and demand effectively.
A data-driven approach to retail demand planning lets you coordinate multi-channel retail operations and give you powerful insights and segmentation opportunities – important for retailers operating online, in-store and within partnerships.
So, let’s look at the impact of demand planning on inventory management, operational efficiency and customer loyalty.
Here are the key ways effective demand planning can empower your retail business:
Beyond the benefits mentioned, good retail demand planning includes risk management.
Certain factors will always be out of your control but you can still put measures in place to cater for unforeseen events and mitigate risks.
You can use demand planning to improve risk management in the following ways:
Demand planning and forecasting help retailers predict, anticipate and meet customer demand, reduce risks and improve efficiency. Powered by the right technology and a clear view of what you need and when you’ll be in a good position to balance supply and demand. Then, you can use business finance to support your needs.
Whether it’s a lump sum to ramp up activities and invest in peak season opportunities, a short-term funding option to help you during a slow period or a working capital loan to ease cash flow issues, business finance solutions can help. Use your planning data and predictive tools to inform your financial decisions.
Alternative finance lenders allow small businesses to scale and adapt to changing demand and market conditions, ease financial concerns and spark growth. Providers like iwoca offer flexible options tailored to your needs, which can be easily accessed without lengthy applications or a pristine credit history.
Short-term loans or revenue-based financing solutions, like merchant cash advances, which provide capital to be repaid as a percentage of future transactions, are ideal for retailers. But you can choose a solution that’s right for you.
At iwoca, we make it simple for businesses to access crucial capital. Our flexible business loans can help you purchase additional stock in anticipation of high-demand periods, avoid stockouts or waste and capitalise on key sales opportunities. When you identify a surge or drop in demand, we arm you with the necessary funds.
Use our small business loans to get fast access to finance for replenishing inventory (to boost customer satisfaction), easing cash flow and maximising sales performance.
See how easy it is to apply for a loan with iwoca and discover how we can fuel your retail business planning.
