Seven Recent Trends In Retail Demand Forecasting And Replenishment

By Jeff Bodenstab, ToolsGroup

Most retailers are facing a shrinking operating “margin for error”. So it’s not surprising that many are looking for more accurate demand forecasting and intelligent stock replenishment. In a report entitled Market Guide for Retail Forecasting and Replenishment Solutions, Gartner analyst Mike Griswold spotlights seven recent trends in this area.

1/ Multichannel retailing is requiring inventory positioning in more locations than ever beforeand causing retailers to focus on “bottom up” forecasting, says Griswold. Until now, he says, many retailers have planned less than half of their assortment at the item/location level, but now they’re looking for platforms that can scan disaggregated demand streams down to the channel and stock-keeping unit (SKU) level. These retailers want their supply chains to be able to fulfill both e-commerce and brick-and-mortar purchases for a wide item assortment of items in a way that is “inventory agnostic”. They look to match the dynamic evolution of demand and give customers multiple order collection and delivery options. If needed, they look to balance inventory between stores and DCs via high-frequency inter-depot transfers.

2/ Less mature retailers are also focused on the demand signal. Griswold reports that retailers with less mature planning capabilities are seeking more consistent ownership of the demand signal, which is often fragmented and often owned by merchandising (especially in apparel). They want a single, unified model that allows stakeholder collaboration via “what-if” simulations of trade-offs. More retailers are now measuring forecast quality, forecast value-add (FVA) and bias, Griswold adds. They’re also looking for more external collaboration, to get better forecasts and share them with sales channels and suppliers.