How can you forecast demand more effectively for your retail buying strategies?

1 Understand your customer segments

One of the first steps to forecast demand is to understand who your customers are, what they want, and how they behave. You can use data from your CRM, loyalty programs, surveys, or social media to segment your customers based on their demographics, psychographics, purchase patterns, and feedback. By knowing your customer segments, you can tailor your product assortment, pricing, and promotions to match their needs and expectations, and predict how they will respond to changes in the market.

2 Use multiple forecasting methods

There is no one-size-fits-all method for forecasting demand, as different methods have different strengths and limitations. Some of the common methods are qualitative (based on expert opinions, surveys, or focus groups), quantitative (based on mathematical models, historical data, or trend analysis), or hybrid (combining both qualitative and quantitative inputs). You can use multiple forecasting methods to compare and validate your results, and adjust them based on your intuition and experience. You can also use tools like Excel, Google Sheets, or specialized software to perform and automate your calculations.

3 Incorporate external factors

Besides your internal data, you should also consider the external factors that may affect your demand, such as the economy, the industry, the competition, the weather, the events, or the regulations. You can use sources like market research reports, industry publications, news articles, or social media to monitor and analyze these factors, and identify the opportunities and threats they pose for your business. You can also use scenarios or simulations to test how your demand will change under different conditions, and prepare contingency plans accordingly.

4 Update your forecasts regularly

Demand forecasting is not a one-time activity, but a continuous process that requires constant monitoring and updating. You should review your forecasts regularly, and compare them with your actual sales and performance. You should also track and measure the accuracy and reliability of your forecasts, and identify the sources of error or deviation. By updating your forecasts regularly, you can adjust your buying strategies in a timely manner, and respond to the changes in the market and customer demand.

5 Communicate and collaborate with your stakeholders

Demand forecasting is not only a responsibility of the retail buyers, but also a collaborative effort that involves other stakeholders, such as suppliers, merchandisers, marketers, store managers, and customers. You should communicate and share your forecasts with your stakeholders, and solicit their feedback and input. You should also align your forecasts with your business goals and strategies, and ensure that they support your decision making and actions. By communicating and collaborating with your stakeholders, you can improve the quality and consistency of your forecasts, and enhance your relationships and trust.

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?