Retail Planning Software – A Complete Guide
Inventory headaches, supply chain hiccups, promotions that flop, we’ve been there! It’s impossible to perfectly predict consumer demand or always make optimal data-driven decisions when you’re stuck in the day-to-day weeds.
But what if you could see into the future to know exactly when to reorder items and never miss a sale? Or let the software handle tedious tasks like data analysis so you could focus on a big-picture strategy?
That’s where retail planning software comes in handy! We know technology often feels cold and boring, but the right solutions truly provide superpowers that can transform your operations. In this complete guide, we’ll dish out what retail planning software is, the key benefits it provides, and, most importantly, how to select the best option for your business’s unique needs and challenges.
What is a retail planning software?
Retail planning software consists of specialized solutions built to enable omnichannel retailers to optimize their core merchandising operations through predictive, prescriptive, and automated capabilities. These tools transcend basic POS, inventory, and reporting functionality to provide robust forecasting, inventory optimization, markdown management, and cross-functional analytics.
By leveraging the latest advances in data science and machine learning, these solutions deliver probabilistic demand forecasts, tailored allocation and replenishment recommendations, markdown optimization, effective promotions analysis, and more. The overarching value proposition is to provide retailers with enhanced visibility and actionable insights to drive improved strategic and operational decision-making in today’s dynamic environment.
In short, retail planning software gives retailers the capabilities needed to effectively plan, execute, and analyze core processes amid complexity and uncertainty.
Key capabilities offered by merchandise planning software include:
- Merchandise planning: Like a retail crystal ball, this allows you to see into the future and create killer product assortment plans, optimize future stock levels, and, of course, keep your bestsellers always in stock.
- Demand forecasting: Do you know how weather forecasters use all those maps, radars, and spaghetti models to predict storms? Retail planning software does the same thing but for consumer demand! It looks at past sales, seasonality, market events, and more to forecast what shoppers will buy.
- Inventory management: It gives you an X-ray vision of real-time stock levels across all your stores. Never miss a sale from an out-of-stock again! The software can even automate tedious tasks like purchase allocation, replenishment, and inter-store stock transfer.
- Pricing optimization: Discover the sweet spot prices that maximize profits. Retail planning software runs complex models factoring in competitor pricing, demand forecasts, and other data to suggest optimal pricing.
Benefits of retail planning software
Investing in retail planning software provides a multitude of benefits for retailers, including:
1) Superior demand forecasting
By leveraging multivariate statistical models to incorporate external demand factors, retailers can achieve forecasts with under 5% error compared to standalone time-series techniques. This significantly minimizes stock-outs, write-downs, and inventory-carrying costs.
2) Scientific inventory optimization
Using advanced AI-enabled inventory optimization algorithms, retailers can determine target stock levels and reorder points for each SKU that balance service levels and working capital requirements. This can yield a 2-3% total inventory reduction while improving in-stocks.
3) Prescriptive assortment planning
Prescriptive analytics empower retailers to optimize product assortment by illuminating metrics like customer partition affinity, cross-elasticities, contribution margin, and more. This facilitates the elimination of redundant and low-velocity SKUs and the targeted expansion of top-selling items.
4) Process augmentation
By automating repetitive operational workflows, retail planning software reduces process cycle times by over 40% and allows planners to focus on high-value strategic activities.
5) Breaking organizational silos
Collaborative capabilities foster improved cross-functional transparency and communication, creating unified goals across merchandising, planning, procurement, and store ops.
6) Holistic visibility
Role-specific executive dashboards provide real-time visibility into omnichannel performance, inventory, costs, and other KPIs to inform data-driven decision-making.
Key features to look for
With an understanding of the benefits, here are some key features and capabilities to look for when selecting retail planning software:
- Demand forecasting methods: Ensure statistical forecasting and machine learning are both supported for optimal accuracy.
- Markdown optimization: The software should automate and optimize markdowns across seasons using advanced algorithms.
- Replenishment: Automatically create purchase orders and transfer stock between locations based on sales forecasts and stock levels.
- Inventory tracking: Look for multi-location, real-time inventory tracking with cost and retail pricing history.
- Merchandising calendars: Calendar views facilitate the planning of purchasing, promotions, markdowns, and other retail activities.
- Pricing optimization: Choose a solution with advanced price optimization based on pricing elasticity and competitive data.
- Promotion planning: Choose a solution with tools to quickly create, manage, and analyze promotions and sale events.
- Seasonal profiles: Software should auto-adjust forecasts and stock levels based on seasonal sales patterns.
- Planogram capabilities: Tools to build planograms, digitally template stores, and assign product categories to fixtures to improve space planning.
- Integration: Ensure integration with POS, ERP, CRM, accounting software, etc. to avoid silos.
- Cloud-based: Opt for cloud rather than on-premise deployment for accessibility, scalability, and faster updates.
- Automated reporting: Look for easy drag-and-drop reporting capabilities to generate pre-built and customizable reports.
- Role-based access: Ensure the software offers role-based permissions so users only see relevant data and dashboards.
- Analytic capabilities: Options like ABC analysis, stock-to-sales ratio, GMROI, and contribution margin analytics provide valuable insights.
- Mobile capabilities: Mobile apps allow for on-the-go access to reporting and inventory management.
- Omnichannel support: The system should unify planning across e-commerce, retail stores, mobile, catalogs, and other sales channels.
For retailers looking to thrive amid the pressures of e-commerce and shifting consumer preferences, implementing merchandise planning software has become a strategic imperative. By providing scientifically-driven forecasting, inventory optimization, markdown management, and cross-functional transparency, these solutions empower retailers to unlock operational excellence and data-guided decision-making.
Leading solutions offer machine learning demand algorithms with >80% accuracy, prescriptive inventory modeling, and seamless integration across technology stacks. Retailers that fail to invest in advanced planning risk suboptimal inventory levels, excessive mark-downs, poor visibility, and disjointed teams.
In closing, retailers must view retail planning software not just as an operational tool but as a way to reinforce organizational digitization, bolster resiliency, and drive sustainable competitive differentiation. Partnering with the right technology provider lays the data foundation that allows retailers to thrive today and into the future.