Overview
Week to week sales trend can happen organically through seasonality, or from other variables such as marketing and discounting. A common practice to help your customers convert is to give a discount. There are many strategies for this. Discounts can be done at the customer level, order level, or item level and any blend of. In this article, we will focus on how to add discounts and lifts using the forecast function.
Workflow
In the Forecast function menu you can locate the Discount Calculation field under the Advanced Section.
Expanding this section will give you access to advanced optional inputs to run a forecast. Under the Discount Calculation we have 2 options currently. Default and Manual.
Methodology
Default- TheGross Sales Retailtotal from theVolume Methoddropdown / theGross Sales Tickettotal in theVolume Methoddropdown * forecastedGross Sales Ticket. Basically, it is taking the discount rate from the trend you are looking at and applying that forward.This method is good when your discounts are consistent and the normal discounts you see due to customer and order level discounts.
Manual Rate- Fields will show that need to be filled in.Discount Rate- This will be the rate you want to discount the AIR (Average Initial Retail) by.Unit Lift- This will be the lift you are expecting to get with the discount applied. This lift we be applied on top of what the normal build/debuilds would be expected due to seasonality. You can use or create reports in your Item Plan Module to identify what the lifts are when taking certain discounts based on historical data or comparable items. reporting articleDiscount Range- Select the time frame that this discount and lift will be applied. Afterward it will go back to theDefaultcalculation.
Output
Click on the below image to zoom in and see the results.
Wk 22 - Wk 23 are using the
Defaultforecasting methodology as they were not included in the selectedDiscount Range.The current volume trend was calculating out to be 8.18% greater than last year and that is what is forecasted for these weeks.
The volume trend discount % was 4.95% on average over the past 4 weeks so that was applied to Wk 22 and Wk 23 as well.
Wk 24 - Wk 26 will have the
Manual Rateapplied.This is where the additional lift is applied and Wk 24 builds by 1.50 over Wk 23. Looking at last year (the seasonality applied before
Discount Calculation) the build was flat to Wk 23 into Wk 24 (1.00).The
% Var Act/Plan vs. Act LYover last year goes from 8.18% to 62.27% based on this lift.The
Discount %goes from 4.95% to 25% and you can see in theGross Sales AURthe price go to $200.25 from $253.80.
Wk 27 - Wk 28 (and forward based on the forecasted timeframe) go back to the
Defaultcalculation of forecasting.There is a debuild into Wk 27 by 0.63 to get back in line with the seasonality.
The
% Var Act/Plan vs. Act LYgoes back to the 8.18%.The
Gross Sales AURandDiscount %are also back to theDefaultcalculation.
Next Steps
From here you can determine if the discount % is needed or not. It could build your Sales $'s but what happens to the Gross Margin $'s? Is this discount to drive sales or clear our a bit of inventory? What does discounting this item do to the rest?
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