Customers expect you to have a product of their desire available in specific color and size, at a specific time. Since many companies fail to provide that, effective inventory management might seem impossible. Fortunately, we bring you tips for building a successful merchandise plan.
What is merchandise plan?
Merchandise plan defines strategy for your sales that’s maximizing return on investment. The goal is to have merchandise available according to market demands, meaning that you want to make sure your products are marketed at right times, places, quantities, and specific product characteristics your customers require. Merchandise plan solves the issues related to stock-outs or excess inventory.
Merchandise plan strategy
There are three steps to consider when developing a merchandise plan: post-season analysis, pre-season analysis, and in-season adjusting.
Post-season merchandise analysis
You want to have a thorough look at your previous season and start analysing performance from there. When approaching your sales analysis, make sure to evaluate the performance on a product category and department on a weekly basis. After you collect insights on performance, have a look at your initial forecast figures and make a result comparison. Additionally, make sure not to overlook the analysis of the changes in the economic conditions, as well as the changes in marketing or organizational strategies – all of those affect your sales performance.
Pre-season merchandise planning
Once you analyse your previous season, you can use the insights you gathered to plan the following season. In order to plan a course of action, you want to make sure to take into an account all organizational actions that might potentially affect your planning, such as marketing and sales strategies. Next, you want to develop a merchandising budget which includes the following: how much of each product needs to be sold, stock support plan, planned reductions, planned purchase levels, and gross margins.
Even with careful and thorough analysis and planning, you might find yourself in a situation where you must deal with excess inventory or stock-out; therefore, you want to create a backup plan, so it doesn’t come as a surprise for you. For example, when facing over-stocks, you might want to consider creating special deals in a form of newsletters, discounts, or flash sales. Additionally, you could aim for secondary markets and outlets.
In-season merchandise adjusting
New technologies have supported the development of supply management. Open-to-buy (OTB) is a financial tool that helps limiting the issues related to over-buying and under-buying. The system is designed to analyse your forecasted and actual sales based on your current inventory. Further, it uses the results to adjust future purchases in order to ensure optimal outcome. To start your merchandise plan journey, you can check out the Inventory Planner app.
Inventory management can be daunting, but it doesn’t have to be. Follow our simple merchandise planning guide and make sure to eliminate the loss of sales once and for all.