Demand Forecasting for
Retail
Predicting future customer demand for products enables businesses to make better decisions regarding inventory management, production planning, and supply chain operations. Accurate demand forecasting helps companies minimize costs, enhance customer satisfaction, and optimize resource allocation.
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Insights That Matter
Predict the exact demand for stock needed at specific times and locations to reduce overstock and stockouts
Assess and optimize marketing strategies and promotional offers for maximum ROI
Identify cannibalization effects between products and recommend product assortment adjustments
Benefits
A resilient supply chain is the backbone of business, and understanding market dynamics is crucial for delivering tangible business value. Employing AI to answer the essential business question, ‘What will be demand for a specific product at a particular location and time?’ offers several key benefits
Direct Benefits
Indirect Benefits
- Reduction in sales losses and order rejections.
- Optimized inventory, minimizing stockouts and excess stocks.
- Responsive order fulfillment to ensure customer trust and loyalty.
- Improved resource allocation and production planning
- Streamlined logistics transportation operations
- Reduction in transportation and warehousing costs
Good Practices to Forecast Product Demand
Build Right Team
Building a demand forecasting solution requires a diverse team with complementary skills. The right team ensures technical accuracy and business relevance. Here are two critical roles you need,
- Business Experts with good understanding of retail industry and knowledge of your business processes.
- Data Science experts preferably with experience in retail business.
Recommendation: Build your own AI capability
Upskill your existing workforce. Modern, user-friendly AI technologies enable non-technical individuals to develop AI solutions. To ensure successful implementation, hands-on AI training should be provided to all team members, from business teams to supply chain experts. This approach not only leverages current talent but also delivers direct value by bring in valuable business insights to build better demand forecasting solution.
Identify Right Data
Identifying the right data is crucial for building an accurate and reliable AI-based demand forecasting solution. Utilizing both external and internal data sources ensures a comprehensive view of the factors influencing demand. Here are some recommendations,
- Historical Sales Data
- Inventory Levels
- Promotions/Schemes
- Pricing Data
- Product Lifecycle Data
- Product Quality or Specification
- Economic Indicators
- Competitor Data
- Weather And Seasonality
- Customer Demographics
- Social Media Trends
You can use our Emly Labs Data Scout GPT for identifying data for training your AI models, with clear, actionable advice.
Define Objectives
Establishing clear objectives and goals is vital for the success of demand forecasting in the retail sector. By focusing on alignment with business strategy, and setting measurable targets, retailers can enhance the accuracy and effectiveness of their forecasts.
- Align with business strategy to support overall growth and efficiency.
- Set specific and measurable goals using SMART criteria.
- Determine key performance indicators (KPIs) like forecast accuracy and inventory turnover.
- Establish short-term, medium-term, and long-term forecasting periods.
- Compare new forecasting methods with existing ones to gauge improvement.
- Define ROI goals to evaluate the financial benefits of improved forecasting.
Choose the Right Tools
Right tools can significantly improve chances of succesful implementation. They facilitate collaboration, rapid experimentation and provide clear, understandable insights.
- Don’t reinvent the wheel; leverage existing, proven AI tools that save time and effort.
- Accessibility: Choose tools that are user-friendly and can be used by the entire team.
- Clarity: Opt for tools that are easy to understand for users of all skill levels.
- Collaboration: Select tools that support teamwork across different departments.
- Cost-Effectiveness: Implement tools that are affordable and offer good value.
- Experimentation: Use tools that allow for rapid testing and iteration of models.
- Explainability: Choose tools that provide clear explanations for forecasts to build trust and understanding among users.
Adopt Industry Best Practices with Emly Labs
Discover how Emly Labs empowers your team to implement the most effective demand forecasting techniques. Our platform uses industry best practices to manage AI projects, enhancing productivity, facilitating teamwork, ensuring data accuracy, and delivering actionable insights.
Manage Your AI Projects End-to-End
Explore, Prepare and Maintain Data Easily
Model Management: Experiment, Build and Maintain.
Transform Data into Stunning Vizual Stories
And the best part? You can achieve all this without writing a single line of code.
Explore Other
Use Cases
Sales Forecasting
Sales forecasting plays a pivotal role in helping sales teams strategize and plan their business activities. By anticipating sales, businesses can set realistic targets and efficiently allocate resources. This proactive approach enhances decision-making, enabling teams to adapt to market changes and drive sustainable growth.
Price Sensitivity
Customers consider various factors when deciding on purchases, with price being a critical determinant that significantly shapes their initial perceptions and buying behavior. While short-term discounts can stimulate sales, it’s essential to evaluate their impact on overall revenue and profitability carefully
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