Committees often decide what is in a circular or other sales vehicle. Frequently, manufacturing rebates weigh too heavily on Circular content. The result is not the most efficient use of this important advertising investment and can cause unbalanced inventories and stock-outs, as sell through is difficult to predict.

Our system allows the merchant to model proposed circular performance before making irrevocable decisions on content and prices. Tradeoffs can be made between reducing overstocked inventory, increasing traffic and managing profit measures like gross margin dollars or gross margin percent.

This tool enables the merchant to predict unit sales based on price. It requires SKU number, cost, selling price, and access to historical sales data and current inventory. The system will produce the following:
  • Generate forecasts of unit sales, gross margin percent and gross margin dollars for every SKU.
  • Statistically derived confidence factors for the accuracy of unit sales, gross margin percent, and margin dollars for every SKU in the circular.
  • Relevant summaries by sub-class, class, category, department, buyer, circular page, and total circular.
  • Required order quantities, given current inventory information, expected deliveries and product sales rates.

In the circular management process, the merchant will be able to see:
  • Unit sales and profit results for historical SKU performance.
  • A history of actual circular performance compared to forecast.
  • A list of SKUs that historically have had high profits and unit sales that merchants might wish to include.

There is a second major benefit to this system.

Historically, to avoid out of stock problems, orders are placed for as many 50-70% or more of the circular items. This has created overstock problems in many, many cases. Where this tool has been employed in major retailers, it was routinely determined sufficient stock already existed for the great bulk of circular items. In most cases, orders were only needed for 5-10% of items in the circular. This has at least two important benefits:

  • Inventory turns are significantly improved while markdowns are minimized
  • Expenses for purchase order preparation, tracking, shipping and handling are greatly reduced.