Merchandise planning is the retail process of deciding what products to sell, when to sell them, and in what quantities across stores and channels. This complex process critically impacts sales, margins, and inventory – but is often still managed via Excel spreadsheets and gut instinct. As customer demand rapidly shifts and omnichannel retail explodes, deficiencies in traditional merchandise planning are becoming painfully clear. Retail executives are seeking out smarter solutions to maximize profits, minimize waste, and keep customers happy.
In this article, we’ll explore how AI-powered merchandise planning software is revolutionizing retail planning. We’ll cover the shortcomings of current processes, how AI software can help, key features to look for, and what a successful implementation looks like. Read on to learn how transformative merchandise planning software takes the guesswork out of retail planning.
The Challenges of Traditional Merchandise Planning
Merchandise planners face a tremendously complex task of predicting demand across products, locations, and selling channels. Making the wrong bets can lead to excess stock or out-of-stock situations costing millions in markdowns and lost sales. Tight deadlines and mounting data make this job even tougher.
Unfortunately, many retailers still rely on manual workflows and basic software tools ill-equipped for this new level of complexity. Specific challenges include:
- Reliance on Gut Instinct Over Data: Without analytical support, planners make assumptions about demand. This introduces bias and error.
- Siloed Data: Crucial data lives in disparate systems, limiting visibility.
- Spreadsheet Bottlenecks: Collaborating and updating massive, error-prone Excel sheets is enormously time-consuming.
- Inventory Distortion: Lack of real-time visibility of on-hand stock skews projections.
- Omnichannel Blindspots: Failing to account for ecommerce cannibalization causes inventory gaps.
- Organizational Silos: When planning happens in isolated teams, the broader impact is missed.
While planners do their best to overcome these obstacles, it’s impossible to produce reliable plans efficiently under these conditions. The costs of continuing with the status quo are untenable.
AI Merchandise Planning Software
AI-powered merchandise planning software solves these challenges with an integrated platform combining advanced analytics, automation, and collaboration tools. Top solutions include:
- Predictive Demand Forecasting: Applying machine learning to historical data, competitive data, events, and other variables generates remarkably accurate demand predictions. Planners gain data-supported guidance.
- Inventory Optimization: Factoring in real-time visibility of on-hand, in-transit, and available-to-promise inventory optimizes stock levels across the network.
- Automated Replenishment: Software generates recommended safety stock and replenishment orders across locations, reducing out-of-stocks.
- Cannibalization Insights: Understanding channel interplay allows precise allocation by channel based on customer preferences.
- Workflow Automation: Tools like bulk editing and templatized processes reduce repetitive manual work.
- Cross-Functional Collaboration: Breaks down silos for transparency across the organization during planning.
- Continuous Optimization: Machine learning gets smarter over time, refining projections based on new sales data.
- Seamless Integration: Ingests transactional data from POS, inventory, CRM, and other systems for a holistic view.
Leading solutions also provide scenario modeling to test contingency plans, version control for plan iteration, exception management to address hotspots, and mobile access for on-the-go adjustments.
Benefits of AI Merchandise Planning Software
Implementing merchandise planning software delivers game-changing benefits across omnichannel retail execution:
- Higher Sales: Minimizing stockouts boosts revenue across channels.
- Healthier Margins: Optimized inventory reduces carrying costs and markdowns.
- Operational Efficiency: Automation and workflow tools increase planner productivity.
- Customer Loyalty: Consistent availability and reduced promotions pleases customers.
- Supply Chain Agility: Tighter alignment with suppliers enables flexibility.
- Reduced Waste: Data-driven plans and inventory visibility cut overstocks.
- Seamless Omnichannel: Cohesive plans meet customers however they shop.
- More Innovation: Freeing planners from repetitive work provides time to create new initiatives.
With optimized plans, retailers can gain a formidable edge over competitors.
Key AI Capabilities to Look For
Not all merchandise planning tools are equally effective. Seek platforms with these key characteristics:
- Cloud-Native Architecture: Delivers speed, scalability, and frictionless upgrades.
- Planning & Replenishment: Offer both assortment planning and automated replenishment.
- Machine Learning At Its Core: Runs predictive AI and generative AI to continuously refine projections.
- Omnichannel Orientation: Unified view and planning across all channels.
- Flexible Hierarchy Management: Adapts to your merchandise categories and location hierarchy.
- Exception-Based Workflow: Flags exceptions for planner review rather than rigid workflow.
- Robust Analytics & Reporting: Tools to slice, analyze, and share insights across the company.
- Change Management Functionality: Compare plan versions and projected impact of changes.
- Ease of Adoption: Intuitive visual interfaces and built-in training resources.
- Platform Extensibility : Configuration and integration to augment capabilities over time.
What Successful Implementation Looks Like
Embracing AI merchandise planning software requires both process and cultural changes for maximum benefit. Strategies for effective implementation include:
- Phase Incrementally: Take a staged approach by product line or channel to ease into new technology.
- Cleanse Data: Ensure product, inventory, and transactional data is normalized.
- Involve Users Early: Get user input to ensure a high-adoption solution.
- Align on Roles: Clearly define new responsibilities between software and planners.
- Communicate Visibility: Share new insights broadly to align the organization.
- Continuously Optimize: Leverage automation while still curating plans.
- Enrich Data Over Time: Adding competitive data, loyalty data etc. improves projections.
- Measure Results: Track KPIs like sales growth, margin improvement, inventory turns.
- Refine Change Management: Analyze plan differences to streamline version control reviews.
With leadership commitment, user training, and evolving best practices, retailers can realize tremendous value.
Time to Transform Merchandise Planning
The intensive complexities of omnichannel merchandise planning demand analytical, automated solutions. Outdated manual approaches lead to costly missteps and inefficiencies. AI-powered software provides the sophisticated capabilities retailers need to plan intelligently.
Implementing purpose-built merchandise planning software allows retailers to optimize inventory investments, maximize sales, and operate more strategically. As competition and uncertainty continues to intensify, the capabilities of AI and automation are becoming a competitive necessity. Partnering with an experienced solutions provider simplifies the technology journey.
Now is the time for retail executives to take charge and transform their merchandise planning function. By leveraging the power of AI, retailers can expertly match supply and demand – creating a foundation for long-term success.
