What is Merchandise Planning?

The merchandise planning process involves strategising when you plan to buy and sell products according to the demands of the market at a certain point in time. This planning is specifically set out and determined to ensure that a business has the highest return on investment and walks away with the most amount of profit. Much of merchandise planning involves understanding what customers need at certain points, what is in demand at the moment and how can you make sure that you do not run out of stock? 


In order to achieve this, a business should have a robust data warehouse where historical sales, stock, gross profit, turnover, markup, markdown and other factors can be analysed. These metrics are needed from the ERP and other legacy systems that are created. Not having these analytical systems in place would make planning near to impossible. 


A basic example of merchandise planning can be considered when looking at a clothing store. As seasons change, certain items become more desired by the target audience while others are not as useful anymore. You will need to properly plan for these changes in what the customer desires through merchandise planning strategies, which can help to anticipate the changes and ensure that a business has enough stock to match the desire! 

Why is Merchandise Planning Important?

Merchandise planning and buying allow for a business to anticipate what customers will need over a period of time and ensure that these items are available and in stock. Without this kind of planning, a business may be purchasing the same amount of items across the board, and while some products may be out of stock quickly, other items that are not as desired by the audience at a certain point in time will not sell, leading to excess inventory and less revenue.

Merchandise planning systems are extremely important when it comes to sales, revenue and customer satisfaction, and without them, a business may find itself struggling to anticipate changes in the market and the desires of its target audience. In order to have an effective planning system in place, a business must have a clearly defined product and sales channel hierarchy, with the product hierarchy being considered from the point of view of the target market. This will help to consolidate the planning system, helping it to flow systematically and in harmony with every component. 

What Are The Components of Merchandise Planning?

Merchandise planning is a system that should flow from one step to another, working systematically with different components, from budgets to quantities of products that have been predetermined. There are different components of it to consider and take into account when planning stock, inventory and buying strategies. Understanding each component and taking planning systems into account when strategizing can help to ensure that every facet has been thought over and planned. The following are the components of it to take into consideration. 


  • Product: The products you stock are important to consider in merchandise planning, and differentiating between different products and their demands over time is incredibly important. You may have certain products that are sold throughout the year and you may also have seasonal stock that should rise and fall in demand over time. 


  • Range: For any type of business, having a wide range of products on offer is extremely important. You need to ensure that your target audience has different options to consider because their individual needs would be different. Ensuring you have a wide range of high-quality products at all times is an essential part of planning. 


  • Price: As certain things become more in demand, prices tend to fluctuate, and when it comes to merchandise planning, having a good understanding of these fluctuations can help a business to better structure and determine price plans. 

Why Should People Do Merchandise Planning?

Merchandise planning can help a business better prepare for buying quotas and help them to match the needs of a target audience at certain times. Over time, certain products become more useful to potential buyers and therefore the number of sales for this specific product would increase. Businesses need to anticipate this increase in desire to ensure that they are properly prepared for the increased demand. If a product that is in demand goes out of stock because a business has not anticipated the increase in sales, it will lose revenue and customers. 

What are The Benefits of Merchandise Planning?

The following are just a few benefits to take into consideration if you are thinking of including this system of management within your business. 


  • Reduction in stock holding: Merchandise planning not only estimates what products will be increasingly in demand but also shows which products will not be as in high demand. When a business has this kind of information, they can reduce the amount of unnecessary stock that they purchase. 


  • Increase in sales: With merchandise planning, a business is able to anticipate which products will be more in demand, ensuring that these products do not run out. Expecting these kinds of sales and increases in demands for certain products will lead to a rise in revenue. 


  • Decrease in lost sales and markdown: With Merchandise Planning, you can minimize the number of sales that are lost due to stock not being available. This is done by increasing the availability of certain products in the stores while reducing other items. This will also reduce the number of items that will have to be placed on sale for a discounted price because you would have correctly estimated the demand for items and would have a minimal amount of stock leftover. Both of these factors will increase the amount of total revenue made over a period of time. 

How Can You Create an Effective Merchandise Planning Strategies?

The importance of merchandise planning should not be underestimated and creating an effective strategy can help to ensure that you are properly prepared to make informed purchasing decisions. One of the most important things to consider when creating a strategy is to think about trends and trend forecasts within your industry. Monitoring trends and ensuring that you are keeping up with them can help ensure that the merchandise you plan to stock will sell and that you are not left with an excessive amount of one product. As trends are constantly changing, being quick to highlight and forecast potential changes in systems is vital in creating a good and well-functioning planning system. 


An important part of merchandise planning is having clearly defined systems and specific people in charge of different aspects of this structure. How the commercial responsibilities are entrusted and who takes the decisions regarding the quantity, price, cost and other factors into consideration should be delegated specifically. This is vital to ensure that a good planning system is created. 

What are Merchandise Planning Solutions?

With QuickApp, merchandise planning software can be easily set up and monitored thanks to the system of smart algorithms that are designed to monitor and predict market trends. When it comes to planning solutions, optimising your product plans, range and capacity can help a business to function more efficiently, with merchandise and sales monitored according to estimated demands.


Using QuickApp as your planning solution is a sure way to ensure that you are able to properly prepare for the changes in demands of customers in a reliable and easy way. With QuickApp’s MFP – Merchandise Financial Planning and MAP – Merchandise Assortment Planning services, we are able to help businesses better structure and incorporate planning systems!