Product Forecasting for 2021 and Past
With all the change and uncertainty in the market this year, many customers have asked us for advice on how to plan for 2021. Companies are finding that 2021 planning is particularly challenging because they can’t use historical data in the same way they have in the past.
Fortunately, having the right insights to drive product forecasting can help. In this post, we’ll walk through three strategies that can help you understand how your business is performing and inform your planning process for 2021 and beyond.
Want to forecast for 2021 with greater precision? EDI Analytics can help provide insights to inform product forecasting, so you can maximize sales opportunities.
Here are three strategies to help your planning process.
1. Examine the retail trends affecting your business
2020 was a year unlike anything we’ve seen before and will probably be different than anything we see in the future. To paint a picture of what 2021 might look like, first examine the trends that affected your business in 2020.
Here are some trends we’ve heard frequently from our customers:
- Brick-and-mortar sales are softer in some categories due to closings or decreased traffic.
- Specific categories such as exercise apparel, athletic footwear, grocery and home improvement have grown dramatically.
- E-commerce sales have accelerated, particularly with in-store pickup as a fulfillment method.
- Decreases in specific categories cause inflated inventory positions in certain areas.
- Supply issues due to factory or country closures and/or increases in demand continue.
Now ask yourself which of these trends, and any others affecting your business, will persist into 2021. All of these can skew your data from 2020 and should be accounted for when planning for 2021.
2. Consider these potential 2021 planning approaches
Since 2020 was likely an anomaly in many ways, you can consider a variety of approaches for 2021 planning. These include:
- Use your original 2020 plan. This is likely based on 2019 data (also known as last last year).
- Go back to 2019 and apply current trends (Q3 of 2020) to plan for 2021.
- Normalize your data based on how many weeks a retailer’s stores were open by location.
- Normalize e-commerce sales as a percent of your business using 2019 data and the second half of 2020 as a starting point.
- Consider product categories that saw huge sales increases and out-of-stock positions, factoring in missed sales opportunities and a more normalized pattern.
- Consider product categories that saw a significant decrease and overstock positions, and plan normalized sales and inventory re-balancing strategies.
3. Stand out with better product forecasting
2021 will be unique in its own way. Now is the perfect time to prepare for how you’re going to monitor trends and react throughout the year.
If you don’t currently have access to store-level sales and inventory data, EDI Analytics can help with data such as:
- Multi-year trend reports to track how your business performed over various years, at the desired level of your item hierarchy.
- Reports on your sales and inventory performance by location.
- Weekly trend reports to see your week-by-week performance, year-over-year.
- Product performance details, such as SKU-level sales data.
- Trend analyses that incorporate store openings and closures by week.
Armed with this information, you can not only build a more informed forecast for 2021, but also make proactive recommendations to your retail buyers. Chances are, your retail customers are also struggling to plan ahead. Having the right data can help you develop a more strategic relationship, especially during these turbulent times, until the retail industry begins to normalize back to historical trends.
Want to tune up your planning with better product forecasting? Talk to an EDI expert to learn how our data can help you build a more informed forecast.
Already an EDI customer? Check out our Training Center video: Leveraging Historical Data to Better Analyze 2020.