Merchandise Financial Planning
Consistently delivering profitable financial plans starts with a tightly integrated merchandising and planning team. These teams must collaborate to build robust product strategies based on a hindsight process that reveals true insight. These plans must be built within the context of the overall brand strategy and operating philosophy set by management. Often these goals are driven by unrealistic expectations which can lead to excessive inventory; driving the need for brand damaging promotions and markdowns. It is imperative that the assortment plan, financial targets, pricing and brand strategy are completely integrated for positive results.
Our assessment approach reviews your current process and compares and contrasts it to industry best practices. We’ll develop a recommendation based on your specific needs, and work with you to develop a disciplined process and training curriculum to help empower your organization to build sustainably profitable merchandise financial plans.
Item level planning can be a laborious process in many organizations, often resulting in accuracy levels that are only slightly better than random chance. Other companies lack proper tools or processes to manage detailed item level plans and therefore manage detailed plans at a higher level.
There are several approaches to item planning that can not only dramatically improve accuracy but also reduce the time required to generate a plan so more time can be spent reviewing plans and business strategies. Depending on the product category, we have seen improvements in accuracy of 5-30% using various statistical and scientific approaches. This can be achieved with robust systems or basic spreadsheets and simple databases. Much of what you can do in the short-term depends on the existing data and attributes currently captured. We can analyze your business model, product categories, data & attributes and evaluate the best approach for your business now and in the future.
Markdown / Promotion Optimization
Markdowns and promotions that are strategically planned can be quite profitable and positive for a brand. But too much of anything can’t be good and many companies have fallen victim to chasing short term results at the expense of long term brand erosion. Typically excessive markdowns are a result of some deeper problem either with product, planning or pricing. No one is perfect however and there will always be inventory that just didn’t work and needs clearing out.
Knowing what discount you need to entice customers to purchase while still maximizing your return is incredibly powerful. There is no easy answer but we can estimate demand at a particular price leveraging current and past sales trends as well product category price elasticity. There are several off the shelf tools that can assist with markdowns and we have experience working with several of them, but we can also build a robust model leveraging various basic tools and databases.