There’s a cash flow emergency happening in the retail sector – in fact, it’s probably happening in your business.
The latest research by Inventory Planner by Sage has revealed:
- Four in 10 retailers currently have too much cash tied up in inventory
- 37% say out of stock issues are a ‘major concern’
- Half describe their cash flow as ‘precarious’ and admit needing to take urgent action.
Demand forecasting using a market-leading solution like Inventory Planner by Sage is a major part of the solution.
It gives merchants the power to accurately predict future sales and only buy stock that will arrive on time and sell quickly (at full price).
It also means merchants can solve many of the issues that cause cash flow chaos, including stockouts and excess stock – stockouts result in missed sales opportunities and dissatisfied customers, while excess stock ties up cash and takes up space.
But there’s a way to get even better results, and that’s by syncing your marketing with your demand forecasting.
What do we mean?
Advanced inventory planning technology, like Inventory Planner by Sage, makes it possible to sync your forecasts with your marketing. This means that if you recently signed an influencer or you’re planning a big promotion, you can factor it into your forecasting for more accurate buying recommendations.
It’s a strategy that enables businesses to proactively strike the delicate balance between supply and demand. It means you can ensure you have enough stock of the products you promote – and likewise only promote products that you have in stock.
This is especially important during peak periods, like Black Friday and Cyber Monday, when most retailers plan major marketing campaigns – but demand can still be unpredictable. It can ensure you have enough stock to avoid disappointing your hard-won new customers.
Canada-based retailer Knifewear, which specializes in Japanese kitchen knives and cookware for professional and at-home chefs, uses Inventory Planner to successfully predict spikes in demand linked to influencer marketing.
Tiffany Wight, the brand’s Warehouse Manager, says: “Inventory Planner is able to accurately track spikes after influencers share a post or one of our posts does well, and it factors that into our forecasting – which is incredible.
“It’s given me the power to make data-driven decisions about the stock we order and when we order it.
“Now, we always have the right items in the right location in order to maximize sales. Overselling has become a thing of the past and we’re no longer holding anywhere near as much excess stock.”
Here are some of the benefits of syncing your marketing with your forecasting:
- It increases profit
Our research shows the recent downturn has left 65% of retailers with surplus inventory, posing a major threat to their bottom line. It also reveals that 75% of businesses with experience of out of stock say it’s had a direct negative impact, causing loss of revenue and customers.By factoring in your marketing, you can boost the accuracy of your forecasts and eliminate the risks of running out of stock and being left with too much product – which will directly increase your profit (and improve cash flow).
- It streamlines operations
Syncing your marketing strategy with your forecasting supports more streamlined, unified operations which run smoother with less stress.
- It fosters agility
Create a more agile and responsive business model, capable of adapting swiftly and proactively to market fluctuations. For instance, when there is a risk of overstock, promotions can be used tactically to boost sales of particular products before they become obsolete.
- It enhances brand reputation
Stockouts damage your reputation. Avoiding stockouts by syncing forecasting and marketing means avoiding annoying your customers.
- It boosts ROI
Marketing is expensive – and promotions can be a waste of time and money if there aren’t enough of the promoted products to satisfy demand. Syncing marketing and forecasting improves your marketing ROI.
Baby and toddler brand Caden Lane, which is known for its range of personalized newborn clothing and nursery decor, is another retailer that has reaped the rewards of using Inventory Planner to sync its marketing with its forecasting.
The brand’s founder and CEO Katy Mimari says: “When a celebrity or influencer posts about their nursery decor or shares a snap of their newborn in a cute outfit, it causes a spike in demand or even starts a whole new trend.
“We use Inventory Planner, connected to our Shopify-powered store, to help us accurately forecast demand and stay ahead of the game.”
7 strategies to get the best results from combining marketing and forecasting:
- Use up-to-date data
Excel sheets are still a common method of demand forecasting, despite being notoriously error-prone and impossible to keep up-to-date. Inventory Planner uses your real-time sales and marketing data to refine demand forecasts.
- Use reliable buying recommendations
Optimizing the accuracy of your forecasts is one thing – interpreting your forecasts can sometimes be another. Inventory Planner translates your forecasts into simple buying recommendations for every SKU that are easy for your whole team to understand.
- Keep an eye on your competitors
If a competitor suddenly launches a promotion, it can have a major impact on your sales. To stay competitive, you need to monitor competitor activity and adjust your own campaigns accordingly. Brightpearl’s retail analytics and benchmarking tool is a great way to support this.
- Plan ahead, where possible
Some marketing is reactive, but often it follows a predictable seasonal pattern. Plan your campaigns in plenty of time, anticipating an increase in the intensity of marketing efforts (and therefore an increase in demand) during peak periods. Inventory Planner can do this on your behalf by factoring in your historical sales data.
- Encourage cross-team collaboration
Your sales, marketing and supply chain teams should communicate clearly to ensure that forecasts are aligned with marketing objectives and inventory levels, to minimize the risk of overstock or stockouts.
- Segment your marketing
Use your advanced demand forecasts to segment your customer base by factors such as geography, demographics and behavior. Tailor your marketing messages and promotions to each segment to maximize relevance and impact.
Inventory Planner is the best tool for stress-free syncing of marketing and forecasting. Find out more with a free demo.