The Landscape of Merchandise Planning
Before we talk about generative AI, let's first understand merchandise planning
in detail. This process involves several critical components, including:
- Demand Forecasting: Predicting customer demand accurately is fundamental to merchandise planning. Retailers must determine what products will sell, when, and where.
- Assortment Planning: Deciding which products to carry in stores and online is a balancing act. Retailers need to offer variety while avoiding overstocking or understocking.
- Inventory Management: Effective inventory management ensures that products are in the right place at the right time. It minimises carrying costs and stockouts.
- Pricing Strategy: Setting competitive and profitable prices is a core element of merchandise planning. Retailers need to consider factors like competition, cost, and consumer perception.
- Seasonal and Trend Analysis: Recognising trends and seasonality is crucial for planning product launches and marketing campaigns.
- Vendor Collaboration: Establishing strong relationships with suppliers and vendors is essential to secure the right products, quantities, and pricing.
Merchandisers and planners traditionally manage each component. They use historical data, market knowledge, and gut instinct to make decisions. However, this approach has limitations in today's fast-paced, data-driven retail landscape.