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By Erin Harris, Integrated Solutions For Retailers magazine

Retail sales are an important economic indicator because consumer spending drives much of our economy. Think of all of the people and companies involved in producing, distributing, and selling the goods consumers use on a daily basis such as food, clothing, and fuel. In a down economy, consumers' discretionary spending is minimal at best, and consumer loyalty is rigorously tested. Therefore, satisfying consumer demand will help keep your customers in your store. It's up to you to stock the right products at the right time without incurring the cost of surplus inventory, which results in significant season-end markdowns. A good forecasting and replenishment policy figures out the uncertainties of supply and demand, drives the entire supply chain, and improves in-stock positions as inventory turnover increases.

Can Forecasting And Replenishment Support Consumer Loyalty Programs?
We're all consumers, and it's annoying when a store is out of the item you want. The on-shelf availability of an item directly impacts customer loyalty. "If you don't have the visibility a forecasting solution provides, you lack the knowledge to offer target assortments and merchandise to meet the demand," says Christine Fotteler, VP solutions management trading industries at SAP. "Forecasting and replenishment applications give retailers an understanding of what a promotion does to demand. These applications directly impact loyalty programs through better demand insight." A retailer's forecast is a key insight into inventory because promotion and price are barometers that influence the consumer's buying decision. There are several ways to determine price and promotion to influence the buying decision and foster customer loyalty. Jim Bengier, global retail executive at Sterling Commerce, suggests using CRM (customer relationship management) data to target your best customers with a product promotion. This will improve customer loyalty and provide an early read on forecasting amounts of that product. He suggests offering these customers a unique promotion (e.g. $10 off an iPhone) and monitoring their buying patterns to forecast the amount you'll need to stock your enterprise.

Used with permission from Integrated Solutions For Retailers magazine.