Merchandise planning is a data-driven process that empowers retail merchandise planners to strategically align inventory with customer demand, leading to increased sales and profitability. The National Retail Federation (NRF) highlights the importance of a well-defined merchandise planning process in driving business success. In this blog post, we will explore the ten essential steps of merchandise planning, backed by data from the NRF, to help merchandise planners excel in their roles and achieve retail success.
Step 1: Sales Analysis and Goal Setting
Data from the NRF shows that effective sales analysis and goal setting are crucial for merchandise planning success. By analyzing historical sales data, merchandise planners can identify trends, patterns, and seasonality, allowing them to set specific sales targets. This data-driven approach provides a solid foundation for the entire planning process and aligns business objectives with market realities.
Step 2: Market and Consumer Research
The NRF emphasizes the significance of market and consumer research in merchandise planning. By conducting in-depth market analysis, merchandise planners gain insights into market trends, competitor strategies, and emerging consumer preferences. This data-driven research enables merchandise planners to tailor their assortments, pricing strategies, and promotions to meet customer expectations and gain a competitive edge.
Step 3: Assortment Planning
According to the NRF, strategic assortment planning is a key driver of retail success. By leveraging data on customer preferences, buying behavior, and market trends, merchandise planners can curate the right mix of products. This data-driven approach ensures that the assortment is aligned with customer demand, leading to increased customer satisfaction and higher sales.
Step 4: Open-to-Buy (OTB) Planning
Data from the NRF highlights the importance of Open-to-Buy (OTB) planning in merchandise planning. OTB planning ensures the optimal allocation of financial resources and inventory investment. By carefully balancing sales forecasts, budget constraints, and desired stock levels, merchandise planners can make informed purchasing decisions, minimize overstock situations, and maximize profitability.
Step 5: Vendor Selection and Negotiation
According to NRF research, effective vendor selection and negotiation significantly impact merchandise planning outcomes. By analyzing vendor performance, pricing, reliability, and delivery capabilities, merchandise planners can make data-driven decisions when selecting vendors. Negotiating favorable terms further optimizes costs and minimizes supply chain disruptions, ensuring a seamless flow of inventory.
Step 6: Purchase Order Management
Data from the NRF emphasizes the importance of efficient purchase order management in merchandise planning. By leveraging data-driven systems and processes, merchandise planners can streamline the creation and tracking of purchase orders. This data-driven approach ensures timely replenishment of inventory, minimizes out-of-stock situations, and maintains optimal stock levels.
Step 7: Inventory Management and Allocation
The NRF underscores the critical role of inventory management and allocation in merchandise planning success. Leveraging data on inventory levels, sales performance, and stock aging, merchandise planners can make data-driven decisions on inventory allocation. This ensures the right products are available in the right quantities at the right locations, optimizing product availability, reducing carrying costs, and maximizing sales.
Step 8: Pricing and Promotion Strategies
Data from the NRF highlights the impact of pricing and promotion strategies in merchandise planning. By analyzing customer behavior, market trends, and competitor pricing, merchandise planners can develop data-driven pricing strategies. This enables them to maximize sales and profitability while remaining competitive in the market.
Step 9: Performance Analysis and Optimization
The NRF stresses the importance of performance analysis and optimization in merchandise planning. By tracking and analyzing actual sales, margins, and inventory turnover against set goals, merchandise planners can identify areas of success and areas for improvement. This data-driven feedback loop allows for continuous optimization of merchandise planning strategies and ensures better outcomes in subsequent planning cycles.
Step 10: Continuous Monitoring and Adaptation
According to the NRF, merchandise planning is an ongoing process that requires continuous monitoring and adaptation. By leveraging data analytics and technology tools, merchandise planners can continuously monitor market trends, customer preferences, and sales performance. This data-driven approach allows merchandise planners to adapt their strategies in real-time, ensuring agility and responsiveness to changing market conditions.
The Bottom Line
Data-driven merchandise planning is crucial for retail success, as highlighted by the National Retail Federation (NRF). By following the ten essential steps of merchandise planning backed by NRF data, merchandise planners can strategically align inventory with customer demand, curate compelling assortments, and drive business success. Embrace the power of data in merchandise planning, and continuously refine and optimize your strategies to thrive in the dynamic and competitive retail landscape.
