Without proper demand forecasting processes in place, it can be nearly impossible to have the right amount of stock on hand at any given time. Start studying chapter 12: managing the merchandise planning process. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Forecasts may be short- or long-term. The realism that good forecasting provides can help you develop and improve your strategic plans by increasing your knowledge of the marketplace. Merchandise allocation is the process of determining how to distribute merchandise to individual store units for maximum sales and minimal markdowns. Having a merchandise plan is critical for the success of every retail business. Sales forecasting is a key element in conducting your business. Accurately anticipating demand and aligning stock positions to those demand forecasts can … Inventory, markdown and profit targets must be established at the start of every planning cycle. MARGIN SALES & FORECASTING OPEN TO BUY Merchandising INVENTORY Process MANAGEMENT PERFORMANCE ANALYSIS STOCK ALLOCATION DISTRIBUTION LOCATIONS People FINANCE SUPPLY CHAIN Influences MANAGEMENT REPORTING POS Systems SUPPLIERS MARKETING MERCHANDISING 2. Top 10 Reasons Why Sales Forecasting Is Important. Demand forecasting is a critical part of the entire merchandise lifecycle, as the accuracy and timeliness of your forecasts will set the course for the entire selling season. Merchandise financial and assortment plans represent the foundation upon which successful merchandise lifecycles are built. Depending on the size and sophistication of the retail operation, this can be a simple process, or an extremely complex algorithmic exercise. Forecasting. Merchandise planning is a systematic approach to planning, buying, and selling merchandise to maximize your return on investment (ROI) while simultaneously making merchandise available at the places, times, prices and quantities that the market demands. Forecasting is a projection of what is going to happen at a much higher level and includes revenue items, overall expenses, and other business components. Forecasting helps a firm to access the probable demand for its products and plan its production accordingly. Merchandise planning step by step process 1. Demand forecasting is a key component to every growing retail business. Retail Merchandise Budgeting. Assortment plans must determine the ideal product ranges and price lines for each unique location, channel and customer segment. Internal business demand forecasting is a helpful tool for making realistic projections. It can also point you toward areas where you need to build capacity in order to meet expansion goals. 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