Three Strategies to Improve Your Merchandise Planning
In today’s fast-evolving retail landscape, staying profitable while meeting customer expectations is more challenging than ever. Merchandise planning plays a crucial role in setting strategic merchandise and financial objectives. Here are three strategies to enhance your merchandise planning and drive better business outcomes.
1. Embrace Omni-Channel Planning
The days of a one-size-fits-all approach is long gone. Brick-and-mortar stores and omnichannel operate with distinct selling patterns, and your merchandise planning should reflect these differences.
For example, while your eCommerce business might be experiencing double-digit sales growth, physical stores could remain relatively flat. However, a critical challenge in eCommerce is the higher return rate, which erode profit margins and must be planned separately than physical stores .
Additionally, eCommerce allows for greater flexibility in product assortment. Online platforms provide retailers with endless digital shelves, enabling them to test new product lines with minimal inventory investment before expanding to physical stores. Proper inventory management is critical to maintaining a healthy inventory turnover in stores. By tailoring your merchandise strategy to each channel’s unique dynamics, you can optimize sales while mitigating risk.
See also: The power of Assortment Planning and the OmniChannel
2. Maintain Multiple Versions of Your Plan
Merchandise planning isn’t a one-and-done exercise—it’s an ongoing, iterative process. In pre-season planning, teams develop a financial roadmap that outlines inventory spend for the year. This “Original Plan” often serves as the retailer’s commitment to stakeholders.
However, once the season is underway, real-world factors such as category performance, vendor shipment changes, and even weather patterns may necessitate adjustments. Retailers must continuously review and update their open-to-buy budgets to reflect these shifts. Maintaining a separate “In-Season Plan” alongside the original allows for better tracking and agility while ensuring financial accountability.
3. Leverage Business Intelligence & Planning Assist Tools
Merchandise planning is a data-intensive process. Consider the sheer volume of information required for just one planner:
- Weekly planning over a full year (71 data points)
- Multiple metrics such as dollars, units, costs, and variances (10)
- Three sales channels (3)
- Product classification from department to category levels (15)
- Key performance indicators like inventory, sales, markdowns, and margins (60)
That amounts to over 1.9 million data points—plenty of opportunities for errors to slip through.
With planners being asked to do more with fewer resources, adopting merchandise planning software with built-in intelligence can be a game-changer. Moving beyond Excel to tools that automatically detect discrepancies, suggest optimizations, and enhance data accuracy will improve planning efficiency and, ultimately, profitability.
See also: Merchant Team Productivity Impact
Final Thoughts
Your merchandise planning approach may have served you well in the past, but evolving market pressures demand new strategies. You can enhance accuracy, efficiency, and profitability by adopting technology-driven solutions, embracing omni-channel differences, and maintaining multiple plan versions.
Take your merchandise planning to the next level by leveraging automation, advanced forecasting, and intelligent planning tools to stay ahead in today’s competitive retail landscape.
