From forecasting to planning to inventory to customer experience, you need a unified system tracking everything and making intelligent recommendations.
Merchandise planning is not an exception. A well-trained, AI-powered solution can change the planner’s life drastically. Merchandising moves goods towards people. For that you need to be able to plan intelligently to put the right product, at the right price, at the right time, in front of the right people.
The secret of successful merchandising in 2023 is AI. The global AI in retail market is expected to grow from USD 4.84 billion to USD 31.8 billion, at a CAGR of 30.5% in 2021-2028 period (source).
Let’s see how Gen AI and large language models can be the driving force for the growth and profitability of your retail business.
4 Pillars of Merchandise Planning
Picture this: you have a store stocked to the brim with products. But, they sit untouched, collecting dust. A nightmare situation!
Avoid retail nightmares with the 4 pillars of merchandising.
1. Product Assortment
The most challenging part of any retail business is the right product mix. You don’t want to run out of stock when there’s demand for the product. At the same time you don’t want to overstock the product to clear it at a huge discount later making a loss.
Creating a right product assortment is crucial for good customer experience and sales that go up month by month.
Tips for Product Assortment
➢ Know your target customer
➢ Keep a check on market trends
➢ Take seasonality into account
➢ Collaborate with the right suppliers
➢ Execute Inventory Analysis
➢ Analyze customer’s shopping habits and patterns
Automate Product assortment with Pluto7’s Retail Planning Solution.
One of California’s largest supermarkets was able to gain deeper, more realistic and prediction-based insights with Pluto7’s Retail solutions to improve inventory assortment. Read the case study.
2. Pricing Strategy
Product price is the top factor that influences purchasing decisions. Before you start selling, you need to determine the worth of your product in a way that it drives profitability while remaining competitive in the market.
An effective price strategy takes into account market share, sales volume, business goals, revenue, promotions, dynamic pricing. Choose a pricing strategy that fits your business objectives.
How to choose a Pricing Strategy
➢ Value metric of the the product
➢ Production cost, overhead expenses, and other costs that business need to cover
➢ Pricing set by competitors
➢ Spending capacity of your market
3. Placement and Presentation
The way you display your products in stores plays a huge role in attracting potential customers.
A well-thought out visual merchandising can boost sales, drive brand loyalty, and provide a memorable shopping experience.
Color psychology, visual hierarchy, store layout, product placement, packaging, signage, and other strategies add to shopper’s delight. It makes them remember you and come back to the store.
Placement techniques to drive sales
➢ Aesthetically appealing and innovative product display
➢ Signs that are easy-to-read Signs
➢ Group related items together
➢ Create a welcoming, friendly atmosphere
➢ Point-of Purchase (POP) Displays
4. Planning and Forecasting
Demand forecasting and planning are the core of any business. Knowing customer’s buying patterns and trends can help plan merchandise better. It will ensure optimal inventory levels, timely replenishment of products to meet customer demand.
Looking at loads of data and predicting future demand is not an easy task. It is not something that can be done using excel sheets and in closed meetings. Best retailers use Gen AI-powered demand planning solutions to combine their historical data with ever-changing market trends, datasets like weather, Consumer Price Index (CPI), Google Ad tech to accurately predict merchandise.
Benefits of Accurate Demand Forecasting
➢ Inventory Optimization
➢ Reducing problems of overstocking and understocking
➢ Reducing cost by eliminating unnecessary markdowns
➢ Improving customer experience
➢ Enhancing productivity
An American department store retail chain achieved 85% accuracy with their demand forecasting by leveraging Pluto7’s expertise and Google Cloud Platform. Read the case study.
Merchandise Planning Challenges: Solving with Gen AI and Large Language Models
Market fluctuation, changing customer preferences, reduced purchasing power, increased product variety, competition, material sourcing are some of the daily challenges in the life of a retailer. In addition, they need to deal with huge amounts of data, analyze it, make demand predictions, plan merchandise, plan assortment, manage inventory, all the while maintaining profitability.
Smart, advanced tools trained on historical data with added intelligence provide actionable insights that can take most of the load of planners. I will not say it would be as easy as sipping coffee and taking decisions but close to that.
AI-powered solutions keep learning and keep improving continuously. More you use them, the more helpful they become. In no time, you would be sipping coffee and making your business decisions. Checkout how they are solving common challenges of merchandise planners.
Challenge #1: Lack of real time data and insights
Consumer choice and preference changes frequently. It is difficult to keep up with that with legacy and spreadsheet like tools.
With DemandML from Pluto7, access over 250 external insights from Google Cloud. This includes Adtech data, trends, and consumer behavior. Demand ML enables businesses to gain deeper insights and make more informed decisions based on real-time data.
Challenge #2: Maintaining balance between online and offline business
Customers today are looking for a seamless experience. Whether they are in store or online, they want to shop smoothly.
Gen AI-powered retail solutions can help centralize and analyze customer data to personalize marketing campaigns. It can help provide customer’s historical data and purchase patterns to make personalized recommendations and an overall delightful shopping experience.
Challenge #3: Balancing inventory levels
Maintaining the right inventory level is one of the biggest challenges for any merchandise planner. Ideally, you should have accurate demand forecasting and replenishment data to avoid excess stock or out-of-stock situations.
Demand ML and Inventory ML from Pluto7 help you stay on the top of your inventory. Both these solutions leverage Gen AI and LLMs to recommend optimal inventory levels for different products.They provide real-time insights into inventory levels, generating alerts when inventory levels are running low and predicting when additional inventory will be needed.
Challenge #4: Efficient Data Analysis
Retailers face difficulties in analyzing large volumes of data efficiently. There is a lot of data to process – from sales, marketing, customers, trends and often this data resides in silos with no means of collaborating or deriving insights.
Pluto7’s Planning in a Box not only brings all the data in one place, it also gives dashboards and reports that assist intelligent decision making. With a chat like interface, it is like having a trusted, experienced colleague by your side.
Challenge #5: Future-Proofing the Business
The retail industry is more dynamic than ever. With the products overload in the market, consumers are spoilt for choice. Brand loyalty is decreasing. Consumers are moving toward personalization.
Reports say 80% of consumers expect a tailored shopping experience.
With an integrated retail planning solution, it is possible to track consumer’s activity, blend it with emerging trends, seasonalities, and their behavior. This helps generate insights with which planners can make their products visible to consumers as per their buying journey.
7 Gen AI- Powered Strategies to Help Merchandise Planners Succeed
Pandemic in 2020, a wedged ship in 2021, recession in 2022, all of these have taken a toll on the retail industry. Retailers are facing continued challenges in 2023 with supply chain, excess inventory, high customer-return rates and reduced spending on goods.
Harnessing the power of Gen AI and Large Language Models, businesses can conquer the ever-present hurdles of the commercial world. By tapping into the boundless capabilities of AI, companies can unlock shopper insights, understand the intricate patterns of consumer behavior.
This invaluable knowledge not only promises to cut returns and chargebacks, but also offers a glimpse into shopper preferences and purchasing habits. Armed with this knowledge, merchandisers can gain an upper hand on competition. Gen AI can help businesses create new market opportunities, and reduce the problems of excess inventory.
Here’s a list of ways Gen AI can help merchandise planners:
If there have been ideas in your head that you wanted to implement for more sales, more customers, brand loyalty, now is the time to put them into action.
Planners are so engrossed in daily reporting and analyzing that there is no time for innovation. Delegate mundane tasks to AI. They are faster and more efficient.
Use your time to come up with new ideas on growing your business. Check the patterns, trends, buying behavior, sentiments generated by Gen AI-powered retail solutions and decide which new product should be added to your merchandise mix. Come up with engaging promotional activities based on this information.
Empower yourself to take data-driven decisions to maximize profitability and reduce risk.
2. Integrated Platform
Merchandisers need a control tower view for better planning. Unified data platforms can bring all the information a planner needs in one place. Build AI and ML on top of it, and you’ve got all you need to grow your business.
Through digital transformation, retailers can gain a comprehensive understanding of the financial implications of trade-offs and make informed decisions in their planning processes.
By embracing integrated merchandise solutions, retailers can shape the future of their business, foster collaboration and synergy across strategic, tactical, and operational levels.
Read more full article here: https://pluto7.com/2023/05/21/merchandise-planning/