How do you use merchandising analytics to forecast demand and manage inventory and stock levels?

1 Understand your customer behavior

The first step to use merchandising analytics is to understand your customer behavior and preferences. You can use various sources of data, such as sales history, loyalty programs, web analytics, social media, and customer feedback, to segment your customers and identify their needs, wants, and pain points. You can also use tools like heat maps, eye tracking, and customer journey mapping to understand how your customers interact with your products and displays. By understanding your customer behavior, you can tailor your merchandising strategies to match their expectations and motivations.

2 Forecast demand and plan assortment

The next step is to forecast demand and plan your assortment accordingly. You can use merchandising analytics to analyze historical and current trends, seasonality, market conditions, and external factors that affect your demand. You can also use predictive models and machine learning to generate accurate and timely forecasts based on multiple variables and scenarios. By forecasting demand, you can plan your assortment to offer the right products, in the right quantities, at the right time, and at the right price. You can also use merchandising analytics to optimize your product mix, assortment depth and breadth, and product lifecycle.

3 Manage inventory and stock levels

The third step is to manage your inventory and stock levels efficiently and effectively. You can use merchandising analytics to monitor your inventory levels, turnover, availability, and shrinkage. You can also use tools like RFID, barcode scanning, and inventory management systems to track your inventory movements and locations. By managing your inventory and stock levels, you can reduce your costs, avoid overstocking or stockouts, and improve your service levels and customer satisfaction.

4 Create engaging displays and layouts

The fourth step is to create engaging displays and layouts that attract and retain your customers. You can use merchandising analytics to evaluate the performance of your displays and layouts based on metrics like sales, conversion, dwell time, traffic, and basket size. You can also use A/B testing, experimentation, and personalization to test and optimize your displays and layouts based on customer feedback and behavior. By creating engaging displays and layouts, you can enhance your brand image, increase your sales and profits, and differentiate yourself from your competitors.

5 Measure and improve your merchandising performance

The final step is to measure and improve your merchandising performance continuously. You can use merchandising analytics to track and analyze your key performance indicators (KPIs), such as sales per square foot, gross margin return on investment (GMROI), sell-through rate, markdown percentage, and customer satisfaction. You can also use dashboards, reports, and alerts to visualize and communicate your merchandising performance to your stakeholders. By measuring and improving your merchandising performance, you can identify your strengths and weaknesses, discover new opportunities, and make data-driven decisions to achieve your merchandising goals.

6 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?