Retail Merchandise Planning

Why Retail Merchandise Planning is important to your Business? 

The traditional Merchandise Planning involves ensuring the right product is available, at the right place, at the right time, in the right quantities, and at the right price. 

The merchandise planning process is an important aspect of the retail sector. It revolves around product assortment, inventory, costing, and allocation to optimize profitability and fulfill customer demands. Retailers utilize data-driven analysis and forecasting with in the retail merchandise planning process to make informed decisions regarding product selection, order quantities, and promotional strategies. 

Why do you need to plan merchandise? 

Retail merchandise planning remains a crucial element for retail stores, and here’s why: 

  • Efficient inventory management:It enables retailers to optimize their warehouse stock efficiently, resulting in a higher inventory turnover ratio. 
  • Cost reduction: Effective merchandise planning reduces inventory carrying costs, which includes labor expenses, overhead costs, and minimizes losses through improved sales. 
  • Enhanced customer experience: A well-planned inventory ensures that customers find what they need, enhancing their shopping experience and increasing the likelihood that they make a purchase. 
  • Revenue growth: With fewer markdowns and better sales due to accurate planning, revenues see a significant boost. 

Why is retail merchandise planning important? 

Merchandise planning holds vital importance for retailers for many reasons: 

  • Profit maximization: It enables retailers to stock the appropriate products in optimal quantities and at the right times, ensuring customer demand is consistently met and thus maximizing profitability. 
  • Inventory optimization: Through meticulous planning, retailers can fine-tune inventory levels, preventing both overstocking and understocking scenarios, which can result in lost sales or excess inventory. 
  • Cost reduction: Effective merchandise planning, backed by data and analytics, minimizes operational costs, reduces waste, and enhances inventory turnover rates. 
  • Competitive edge: In the dynamic retail landscape, merchandise planning is indispensable for staying competitive and meeting evolving customer expectations. 

5 ways merchandise planning can positively impact your business 

  • Optimized product assortments: Data-driven analysis empowers planners to collaborate with buyers, ensuring the creation of well-structured range assortments with the right number of options and quantities. This precision leads to higher sell-through rates, minimized markdowns, and increased return on investment, ultimately reducing costs and boosting profits. 
  • Accurate store inventory allocation: Store grading, a core responsibility of Merchandise Planners, guarantees that the right products reach the stores where they are most likely to sell. This eliminates instances of incorrect stock placements, preventing costly mishaps like sending winter items to tropical regions. 
  • Markdown cost reduction: Effective merchandise planning includes tactical range management throughout the season, reducing the need for significant markdowns to clear overstocked inventory at season’s end. 
  • Working capital efficiency: Timely management of inventory prevents cash from being tied up in slow-moving stock. This allows businesses to utilize their Open-to-Buy (OTB) more effectively and invest in more profitable product lines. 
  • Reduction in the cost of staff: By smoothing the flow of merchandise through distribution centers and stores, merchandise planning minimizes the need for hiring additional staff during peak seasons, resulting in substantial wage bill savings. 


In today’s competitive retail industry, merchandise planning is highly important. Adopting a strategic approach to managing inventory business intelligence services helps you stay ahead of the curve but also caters to the evolving needs of your customers. For those aiming to enhance their retail business’s profitability, merchandise planning should be placed at the top of their strategic priorities.