Fashion Merchandising - Sales Forecasting

Charles Matses

FMM 225

Evaluate 4.2

May 24, 2013

Sales forecasting is a crucial tool that retailers can use to prepare for their future. It allows retailers to plan for their financial future by evaluating the industry and reviewing the past. When implemented correctly, the benefits of forecasting can help ensure the long term success of the business. Some of the benefits of successful sales forecasting are industry knowledge, rise in cash flow and revenue, and more accurate financial data (Virtual Advisor Inc, 2009). There are several forecasting methods that analyze a retailer’s sales history, and use it to create a strategy for the future. Depending on the size and industry of the specific retailer, some forecasting methods might be more appropriate than others. Nonetheless, I would recommend all retailers to implement some form of forecasting method or strategy.

The two main forecasting methods are quantitative and qualitative, which are usually used at the same time by most companies (Basu, 2013). The Quantitative method is a numbers approach to forecasting, focusing on the retailer’s financial data. The retailer’s financial history is analyzed and used in various formulas to estimate forecasting details. The quantitative method can help a retailer accurately predict their sales, inventories, and costs for the upcoming period. Qualitative forecasting focuses more on expert opinions and other intangibles to gauge the upcoming period. When used correctly, retailers will have a better understanding of their specific strengths, weaknesses, and opportunities for the future. This will assist retailer’s fix their current problems and get ahead of their future competition within the industry. One of the major benefits of Qualitative forecasting is revealing sales patterns and industry behavior (Basu 2013). Taking advantage of patterns allows the retailers to allocate their budgets more flexibly. For example, they can budget a new marketing or advertising...