Retail demand forecasting is an integral part of any brand or retailer’s planning process, anticipating consumer needs to stay in line with their future buying behavior. In the past, this has translated into brands and retailers hoping they’ve properly navigated the myriad of variables such as weather, events and emerging trends while keeping a firm eye on what competitors are doing. This is based on a mixture of industry knowledge – often referred to as an art, although today this is no longer sufficient.
Predictions haven’t all come out of thin air, though. Forecasters typically analyze a variety of data points to estimate the right inventory mix, including where to stock inventory and in what quantity. But, to achieve a high gross margin return on investment (GMROI), there is an ever increasing need to generate a more accurate forecast for the demand of each SKU in every channel and location, and this requires more than a few data points.
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