Don’t Let Revenue Slip Away: Why Demand Forecasting is more necessary than ever
Predicting demand for products and optimizing inventory have never been simple tasks for retailers. But they have become much tougher in today’s omnichannel era, characterizedy by more frequent product introductions and more volatile demand patterns.
That’s why its essential to employ better forecasting tools if you want to achieve fewer missed sales, lower working capital and less writedowns.
The risk of using traditional methods
Many retailers still rely on their experience to gauge what they will stock because, to a certain degree, it is intuitive. As the weather gets colder, for example, stores expect to sell more winter gear.
But when are you likely to sell the most, and when? And what if the peak selling time for certain product starts earlier than you thought? Perhaps you might have stocked those items earlier or given an additional discount or another incentive during that time to attract more customers over the competition.
Today, there are more seasons and styles to consider as well as market trends, price competition, local events, weather, and convenience – all of which can influence a shopper’s purchasing decision.
More than ever, using only historical data for statistical forecasting may no longer be enough, and retailers who aren’t fully taking these factors into account risk losing out on revenue.
Accurate forecasts reduce lost sales and unwanted stock
It is still all too common for retailers to be struggling with spreadsheets that have not been synchronized, lack accurate market data, and don’t filter outliers or weigh factors properly. More and more retailers are realizing that these traditional methods are slowing them down.
Retailers need adopt a software solution that not only helps them make more accurate forecasts, but allows them to monitor sales in real time and respond quickly to any deviations in their predictions. Coupled with automated replenishment capabilities, stores can ensure their stock doesn’t run out or divert future orders before overstock becomes a problem.
The solution is simple
Openbravo Commerce Cloud includes a connector for frePPLe, a leading open source solution for demand forecasting and inventory planning software. This solution can be used to estimate demand for stock based on sales data, buying patterns, and other trends across store locations, regions, and time cycles. That historical data is then fed into algorithms to produce recommendations for smarter inventory planning and pricing strategies.
The more accurately retailers can predict sales, the better they can manage pricing strategies, stock orders, warehousing, and fulfillment needs, as well as the staff to support them.
For more information on our solution, replay our webinar Demand Forecasting and Inventory Planning in Omnichannel Retail: Are You Ready for the Challenge? If you would like to discuss how Openbravo can help your business improve its demand forecasting, don’t hesistate to contact us directly.