How can you balance sales goals and inventory planning for a successful career in merchandise planning?

If you are interested in a career in merchandise planning, you need to master the art of balancing sales goals and inventory planning. These two aspects of retail operations are closely related and affect the profitability and performance of your business. In this article, we will share some tips and best practices on how to achieve this balance and succeed as a merchandise planner.

1 What is merchandise planning?

Merchandise planning is the process of forecasting, planning, and allocating the right products, quantities, prices, and promotions for your target market. It involves analyzing sales data, customer demand, market trends, inventory levels, and financial objectives. Merchandise planning helps you optimize your assortment, maximize your sales, minimize your markdowns, and increase your margins.

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2 Why is balance important?

Balancing sales goals and inventory planning is important because it allows you to align your product strategy with your financial goals. If you plan too aggressively, you might overstock your inventory and end up with excess or obsolete products that you have to sell at a loss. If you plan too conservatively, you might understock your inventory and miss out on sales opportunities and customer satisfaction. Finding the right balance requires you to be realistic, flexible, and proactive.

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Artemios Tziomakas

Inventory control manager
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The balanced inventory secures every potential sale while preventing overstock and minimizing operating costs. Maintaining the proper levels of inventory through inventory balancing ensures that products are available for customers.

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3 How to set sales goals?

When setting sales goals, you need to consider several factors, such as historical sales performance and trends, seasonality and events, competition and market share, customer preferences and behavior, product life cycle and innovation, and marketing and promotional activities. To ensure your goals are effective, you should also use the SMART criteria to make them specific, measurable, achievable, relevant, and time-bound. This will help you reflect your business objectives, market potential, and customer expectations in your merchandise planning.

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Stephen Quander

Retail District Director at Nike | Realtor | Author of Lessons in Leadership Vol1
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Balancing sales goals with inventory planning is vital. SMART goals align our objectives with market potential and customer expectations, ensuring we meet demand efficiently without excess. This strategy propels business by optimizing resources and meeting sales targets effectively.

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4 How to plan inventory?

Inventory planning is the process of determining the optimal level of inventory to meet your sales goals and customer demand. This involves calculating the inventory turnover ratio, which is the number of times you sell and replace your inventory in a given period. To plan inventory, you need to consider various factors, such as lead time and replenishment frequency, stock availability and allocation, merchandise mix and assortment, product attributes and classifications, inventory costs and risks, and merchandise performance and profitability. Additionally, you should use inventory management techniques such as open-to-buy (OTB), sell-through, stock-to-sales ratio (SSR), and weeks of supply (WOS) to ensure efficient management of your inventory.

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5 How to balance sales goals and inventory planning?

Balancing sales goals and inventory planning is an ongoing cycle of monitoring, evaluating, and adjusting your plans. You should track your key performance indicators (KPIs), such as sales, inventory, margin, turnover, sell-through, OTB, SSR, and WOS. Compare your actual results with your planned goals and identify any gaps or variances. Based on your analysis, you should take corrective actions such as revising your sales forecast and inventory budget, reallocating inventory across channels and locations, repricing products or launching promotions, reordering or canceling products, and liquidating or donating excess or obsolete inventory.

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6 How to develop your skills?

As a merchandise planner, you can develop your skills by enrolling in courses or programs that teach you the fundamentals and best practices of inventory management. Additionally, reading books, blogs, articles, or reports that provide insights and trends on retail operations and consumer behavior can be beneficial. Joining networks or communities to connect with other professionals and experts in the field of merchandise planning is also recommended. Seeking feedback or mentorship from your managers, peers, or mentors can help guide and support you in your career development. Lastly, applying your knowledge and skills in real-world scenarios and projects will challenge you and help you grow.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you balance sales goals and inventory planning for a successful career in merchandise planning?

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1 What is merchandise planning?

2 Why is balance important?

3 How to set sales goals?

4 How to plan inventory?

5 How to balance sales goals and inventory planning?

6 How to develop your skills?

7 Here’s what else to consider

Retail Operations

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