Item forecasting plays a crucial role in retail planning, helping businesses accurately predict sales and make informed decisions. Our recent webinar shed light on various methodologies and best practices for item forecasting using the Toolio tool. From leveraging historical data to incorporating new colors and managing newness, here are the key takeaways to help you master item forecasting.
To see the full webinar and dig into more of these or gather your own takeaways, you can view it on-demand here.
Forecasting Methodologies: Merchandise Planning, Like-for-Like, and Item Plan Forecasting
The webinar explored several forecasting methodologies, including merchandise planning, like-for-like, and item plan forecasting. Each methodology serves different purposes and can be utilized based on the availability and reliability of historical data. For more information on when to use which version, see our help content here.
Leveraging Historical Data for Accurate Forecasts
Historical sales data is a valuable resource for forecasting. By analyzing past sales patterns, businesses can identify trends, seasonality, and demand fluctuations, providing insights for more accurate forecasts.
Forecasting New Items: Alternative Approaches
Forecasting new items without any sales history requires alternative approaches. By leveraging average sales per week and planned weeks of sales, businesses can generate initial sales plans based on estimated demand.
Forecasting New Colors: Utilizing Established Trends
When introducing a new color for an existing item, forecasting can be done by utilizing the historical data of the proven-selling color. The like-for-like methodology enables businesses to project the sales curve for the new color based on the established trend of the existing color.
Understanding Seasonality and Trend for Accurate Projections
Understanding seasonality and trend is crucial for accurate forecasting. Seasonality refers to the predictable patterns in sales that repeat over specific time periods, such as holidays or seasonal trends. Trend represents the overall direction and magnitude of sales growth or decline over time.
Volume Factors: Adjusting Sales Projections Based on Item Variations
Volume factors allow for adjustments in sales projections based on known differences between items. By applying volume factors, businesses can account for variations in demand, such as new colors selling at a different percentage compared to the original color.
Size Spread Adjustment for Enhanced Forecast Accuracy
If sales by size are significant, adjusting the size spread can improve forecast accuracy. Businesses can manually assign size spreads to reflect historical sales patterns, ensuring that the forecast considers the specific demand for different sizes.
Reconciling Merchandise Planning and Item-Level Demand
Reconciling merchandise planning with item-level demand plans is crucial for a comprehensive view of sales strategies. Connecting top-down and bottom-up approaches allows for a holistic understanding of sales targets and ensures alignment between overall company goals and individual item forecasts.
The Role of Assortment Planning in Managing Newness
The webinar emphasized the importance of utilizing the assortment planning module for managing newness. This module provides features for planning multiple new products, clearing launch flow, and modeling curves based on similar products or product groups.
Discover how Toolio's assortment planning module can help you manage new products and model curves based on similar products or product groups here.
Toolio: Enhancing Item Forecasting and Merchandise Planning
The webinar highlighted the capabilities of Toolio for item forecasting and merchandise planning. The tool offers advanced functionality to improve the accuracy of sales projections, manage newness effectively, and align strategies with overall business goals.
If you’re looking for a merchandise planning tool to help improve forecasting and other functions, of course we think we’re great, but you can leverage our RFP tool to explore how we fit your needs as well as other options.
Conclusion: Gaining a Competitive Edge with Effective Item Forecasting
Item forecasting is a critical aspect of retail planning, enabling businesses to make data-driven decisions and optimize their inventory management. By leveraging various forecasting methodologies, historical data, and the capabilities of tools like Toolio, retailers can improve the accuracy of their sales projections, manage newness effectively, and align their strategies with overall business goals.
Remember to refer to the Toolio website and resources for further guidance on item forecasting and merchandise planning. Toolio's roadmap includes future enhancements to address launch lift and forecasting for new colors. The tool is continuously evolving to meet the needs of users and provide advanced functionality for more accurate and comprehensive item forecasting.
With a comprehensive understanding of these concepts and methodologies, retailers can gain a competitive edge and thrive in a dynamic market.