Why Retail Planning Should Be Dynamic

October 2012 Integrated Solutions For Retailers

By Ning Chiu, founder and CEO, daVinci

To avoid improper inventory investments, retailers should be willing to revise their planning processes and leverage business intelligence.

Economic volatility and the accelerated pace of technological innovations are increasingly putting retailers under pressure to reduce their exposure on their inventories. Assortment planning is more critical now than ever. Getting the right products to the right customers at the right time begins with planning the right merchandise assortments that feed the rest of the supply chain.

Given the long time horizon of any planning process, businesses have to make big assumptions when they start building their plans. These plans are then relied on to supply their purchasing requirements and to achieve optimal inventory levels. Consider this: Even the most perfectly developed plans are flawed as soon as they are completed. Why? Because that perfect plan is made imperfect by the passage of time. The unpredictability of consumer preferences, market trends, weather, etc. pokes major holes through those original assumptions. These changes can render many plans erroneous and cause businesses to make improper inventory investments. To truly be effective, planning has to be dynamic.