How to improve your merchandising Plan

In today’s challenging retail environment, retailers are facing increasingly complex challenges to ensure their business stays relevant and profitable while satisfying their customers. Merchandise Planning sets strategic merchandise and financial objectives while Buying teams aim to meet these goals head-on. Here are three strategies you can apply to improve your merchandise planning.

1. Omni Channel Planning

Gone are the days of one size fits all. Brick and Mortar stores and eCommerce do not have the same selling patterns. Your e-commerce business may be bringing in double-digit sales, while your bricks and Mortar stores are staying relatively flat.

Yet a margin eroding factor is that the merchandise return rate in eCommerce is likely higher than that of your stores. You are not alone in this. Last year, eCommerce returns were at 30% of sales, whereas Bricks and Mortar stores were between 8% and 10%. The high return rate on E-commerce significantly impacts your bottom line.

It is also essential to consider the difference in product depth and breadth. Your eCommerce channel can carry product lines not available in stores. eCommerce gives retailers endless showing isles and the luxury of testing new lines before a more significant inventory investment.

See also: Omnichannel Merchandising Strategy

2. Multiple versions of a plan

Planning is never a done-and-out exercise. Instead, it is an iterative process throughout the year. In pre-season planning, the team creates the company’s financial roadmap to determine your annual Inventory spend. This Inventory Spend or Open to buy is often committed to an Original plan version the retailer commits to the board or company owners.

As you move into In-Season, your plan will likely change based on over or under-producing categories, shipment changes from Vendors, and even the weather. As a result, you will examine, replan, and change your Buyers’ open-to-buy for the coming months to reflect these changes. You’ll likely want to keep your original plan intact and maintain a separate revised version of your in-season planning so you can keep an eye on both plan versions.

3. Using BI and Planning Assist

Anyone who has ever created a merchandise financial plan knows how data-intensive it is.   Let’s do the math:

• Year-to-week plan (71)
• Dollars, units, cost plus variances (10)
• The company has three channels (3)
• Department to class level products (15)
• Metrics such as Inventory, sales, receipts, markdowns, performance metrics, gross margin, etc. (60)

That is over 1.9 Million data points. Imagine making one mistake in one cell – a needle in a haystack! Planners are constantly being asked to do more with less. We need to equip them with the technology that allows them to be more productive. Getting out of Excel is a start. Getting into Merchandise planning software  with built-in intelligence to review cells for errors will significantly improve the quality of your merchandise plan and, by extension, your gross margin

See also: Merchant Team productivity impact

In summary, your merchandise planning process might have been working and served you well in the past, but new pressures and market changes are increasingly challenging all of us to examine the way we think about the planning and buying process.

Take your planning to the next level by using new tools that will help you automate your current process, give you the granularity you need to plan your different businesses, track your plans with multiple versions, and leverage innovative tools, and demand forecasting to improve the accuracy and quality of your merchandise plans.