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360 Degree Vision

360 Degree Vision

As the global lockdown continues to ease in many countries, and retailers recalibrate their supply chains following a period of extraordinary volatility, many are reviewing their demand planning processes. Covid 19 sparked a wave of unprecedented demand for grocery stores, with panic buyers hoovering up an array of items, from pasta and home baking ingredients, to tinned meat and alcohol.

Traditional Demand Planning has been instrumental for retailers and distributors in managing stock levels for those kinds of ‘regular purchase’ products, particularly as they adjust to more predictable patterns once again. But what about those categories which are subject to continuous volatility in their sales cycles?

Predicting the unpredictable

DVDs and video games; publishing; music; mobile phones and tablets for example are all notoriously unpredictable, with highly complex sales curves. Driven by dynamics which, unlike those captured in traditional demand planning systems, are not based on like-for-like replenishment and typically see a major peak in demand following a launch before falling drastically at the end of that period. In fact, for some of these products, two thirds of sales take place in the first few weeks of a new release. Against this backdrop, to miss the huge potential within this window is akin to handing over profits to a competitor on the other side of town.

Similarly, the end of the launch cycle often sees a sales surge too in some categories, as promotional activity takes place before, say, a DVD title or video game is moved to back catalog. Being one step ahead and understanding the promotions and pricing at varying stages is crucial in maximizing sales across the entire product lifecycle.

But with so many variables in play, how can retailers harness all available insights to maximize margins, increase market share, and instill loyalty for these segments?

Plotting the right curve

In order to fully capitalize on the opportunity, retailers must ensure the right stock is in the right place at the right time. While that might sound obvious, achieving this finite balance isn’t always easy, testament to which is that trillions are lost each year through inventory mismanagement, including overstocks, out-of-stocks, and preventable returns.

Ahead of the curve

Through adopting systems with specialist capabilities, algorithms and in-depth knowledge of the dynamics of industries which are subject to complex sales curves, retailers and distributors are able to react to daily buying patterns, or even hourly ones, and adjust forecasts accordingly. So, for example, sales data received on day one will drive a plan for the coming weeks, with each subsequent day’s sales being analyzed to recalculate and refine that plan.

It’s imperative that these systems also factor in variables such as seasonal demands, marketing spend, promotional events, the level of buzz created via word of mouth on social media, competitor launches, and the number of other stockists in the vicinity, as well as success and trends associated with previous releases. Only through utilizing all of these insights can retailers align insights and create plans which ensure demand is met as accurately as possible.

Profits at the peak

Seizing the opportunity, precisely at the time at which demand peaks, is the only way to boost profitability in these complex, unpredictable sectors.

The good news is that the best inventory management solutions, like Avolin’s Vision, are supported by dedicated capabilities, which apply algorithms to refine and shape sales performance in real-time, retailers can minimize inventory and returns, maximizing sales to boost market share.