Retail Demand Planning Software: Key Features and What to Know Before Starting the Development Process
If you’re running a retail business, stockouts and overstocks can drain your profits pretty fast. In 2022 alone, these inventory disruptions cost retailers in the US and Canada nearly $350 billion in lost sales. And they happen more often than you might think: 1 in 5 items consumers want is out of stock at their local store.
Luckily, retail demand planning software is a decent way to avoid lost revenue and frustrated customers. In this guide, we’ll explore its key features and what to consider before development.
What Is Retail Demand Planning Software and Who Needs It?
Retail demand planning software is a solution that helps businesses predict customer demand and plan their inventory levels accordingly. Besides forecasting capabilities, such software automates purchasing, matches stock with seasonal or promotional sales cycles, and, of course, reduces overstocks and stockouts.
Who benefits most?
- Fashion retailers. These need to deal with seasonal trends and changing customer preferences.
- Grocery chains. These have to manage perishable goods and holiday demand spikes.
- Mixed retail (online and offline) businesses. These need a single view of inventory across all their channels.
6 Must-Have Features in Retail Demand Planning Software
When developing retail software, you want to make sure it connects what your customers want with what your shelves actually hold. Here are six demand planning software features you cannot miss:
Sales history analysis. This feature pulls past sales data and finds patterns in it. It divides historical sales by SKUs, locations, and time frames, so that you can identify trends and plan more easily.
Seasonality and promotion adjustments. Holidays, local events, marketing campaigns, or seasonal sales change buying behavior altogether. Your sales forecasting software should account for that and allow for manual or automatic demand tweaks.
Multi-store and multi-channel visibility. If you sell across multiple channels, such as online, in-store, and maybe marketplaces, keeping your stock balanced is everything. Make sure your demand planning tool consolidates all those sales streams into one forecast.
Inventory and supply sync. Once you have your demand forecasts ready, you need to match them with your current and incoming stock. Inventory and supply sync does precisely that.
Real-time alerts and reforecasting. You absolutely need this feature in cases when something unexpected happens (for example, shipments get delayed or certain products go viral). Alerts ensure you respond timely, reforecasting updates, numbers, and your plan.
Integration with POS, ERP, and budgeting tools. This one makes your product demand analytics more accurate and comprehensive. How? It gives your system more data to study and work with.
What to Know Before You Start Development
Before you start building a demand forecasting tool for retail, keep these four realities in mind:
- Garbage in, garbage out. Your retail demand planning software is only as good as the data it receives. This means using incomplete or inaccurate sales, inventory, and other business intelligence data often leads to vague forecasts. Clean and standardize everything before development.
- Business goals shape the software. The six features we’ve just listed are standard in most good forecasting tools. But you might not need all of them at once. Or you may need to customize them to your business (for example, using AI-powered demand planning instead of a regular one). Clarify your priorities, so the build fits your strategy.
- Legacy systems might fight back. Older POS and ERP integrations can be problematic. Allocate extra time, budget, and technical expertise to make sure your new solution works well with the tools you already use.
- Custom means it’s built around your business. Building retail demand planning software doesn’t mean copying off-the-shelf tools you see on the market. Make sure your custom build and forecasting logic are customized to your exact needs.
Where to Start If You Want to Build a Custom Retail Demand Planning Tool
Now that you know about the top four considerations, let’s discuss how you can prepare for custom retail demand planning software development. Here are several steps:
Start with a Discovery Phase
At this point, you should outline your requirements. To do this, map out your current workflow pain points and how you aim to solve them with a new tool. Interview key stakeholders from your sales, operations, and finance teams to learn the actual situation and needs. Based on your findings, create a prioritized list of features and integrations.
Decide Between Standalone or Embedded
- A completely new, standalone demand planning application. Offers maximum flexibility, control, and a fresh start, but requires significant dev resources.
- A new module or feature set within your existing ERP, POS, or inventory system. Faster to deploy and integrate, easier to adopt, but may be less customizable.
Choose a Development Partner
Unless you have a dedicated in-house team experienced in retail, data science, and forecasting models, you’ll likely need an external development partner. Whether outsourcing, staff augmentation, or another hiring model, look for companies (or teams) that:
- Worked on similar projects in retail.
- Have proven integration skills.
- Know and work with your current tech stack.
Evaluate their fit by exploring case studies and references from past clients, along with conducting interviews.
Plan for Ongoing Improvements
Once you have your partner, consult with them to build a roadmap for iterative updates. Those can include anything from improvements to forecasting algorithms to new feature implementations. Besides that, decide on how you’ll gather feedback from end-users.
Conclusion
Retail demand planning software is a must on your way to avoiding stock issues, frustrated customers, and reputational damage. It lets you stay ahead of changing consumer needs, seasonal swings, and generally any unexpected events.
Whether you decide to build a standalone or an embedded solution, the start is always the same: clear business goals, accurate data, and a solid plan. Need advice on that? Contact Integrio Systems. We’ve got profound retail industry expertise, building demand planning solutions in particular.
FAQ
The time to build a custom demand forecasting tool for retail largely depends on the number and complexity of features and integrations, and on whether you’re working on a standalone or embedded solution. A basic module within your ERP might take around 6 months, while a complex, standalone platform can take 9–12 months or more. A clear discovery phase can help speed things up.
It depends on the “garbage in, garbage out” principle and the forecasting models used. That is, if your data is of high quality and algorithms are well-tuned, you’ll get highly accurate forecasts.
Of course, as with any other software, it does. Your retail demand planning tool may need bug fixes, new features, algorithm refinements, and ensuring all integrations work correctly.
Not necessarily. Good retail demand planning tools often have seasonality and promotion adjustments as a feature. That means the same system can handle promotional forecasting as part of its core functionality.
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