Merchandise Planning & The Importance of Store Classification Structures

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Editor’s Note: This article was originally published on February 2, 2015 and was updated on January 19, 2016.

What is merchandise planning, anyways?

Ask 10 retailers “what is merchandise planning?” and you will probably get 10 different answers. At CRS, we define merchandise planning as the systematic approach to maximizing a retailer’s profitability and return on investment through accurate sales and inventory forecasting.

Merchandise planning in action

Merchandise planning increases profitability by maximizing sales potential and minimizing losses from “stock-outs” and markdowns. In order for a retailer to do this, it is vital to track, measure, and respond to customer “votes” (purchases) by classification (i.e. tops, denim, accessories, etc.) A well-defined classification structure is the key to gaining the insight needed to take full advantage of your store’s sales potential.

Create a classification structure

In fact, we base our merchandise planning at Canadian Retail Solutions on those specific classifications as each one represents a mini “business” within the confines of your store. Managing each of those “businesses” or classifications separately will lead to the proper flow of merchandise in your store. As we know, every season the fashions change, and vendors offer some great and some not-so-great merchandise; classifications allow you to look beyond these highly variable factors (such as fashion trends) and gain long term understanding across the marketplace to recognize what is actually in demand at your store.

Winning@Retail™, a merchandise planning solution

Our Winning@Retail™ solution accurately forecasts sales and inventory, by classification, and provides a dynamic cash flow management tool that puts you in control of your business.

If you need help developing a well-defined classification structure for your store or want to learn about how you can grow your business in 2016, give us a call!


Dan Holman is a certified Winning@Retail™ consultant with twenty-plus years of success in diverse business development, new ventures, business expansion and strategic sales planning.

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