Overview
All retailers experience shifts in demand whether influenced by holidays such as Christmas or Chinese New Year or by weather changes such as summer or winter. Many of these changes are fairly predictable and can be easily identified in historic data. The issue retailers face, especially with short life items, is that there isn’t sufficient history on an individual item to predict the seasonality in the future. This is where sales curves come in, they allow users to generate, import or manually create a seasonal index that can be applied to products for the purpose of forecasting future sales demand.
Too busy to read the article, watch this video on how to set up and apply a sales curve.
Setting up a sales curve
Step 1: Create a sales curve
To setup a sales curve, navigate to Settings > Data Management > Sales Curves and click on Add.
The following selections are available to generate a sales curve
Sales Curve Name - It is advisable to name the sales curve in a way that it is easily recognizable when selecting for the appropriate product or time period.
Data Source - The data source allows for the creation of a sales curve based on history sales or on the merchandise plan. Users may find it helpful to use a curve that has been planned rather than generating from historic sales.
Metric to Use - Depending on the source selected, Gross Sales Units or Demand Units (to account for lost sales) can be selected.
Filters - filters allow for curves to be generated for specific types of product that may experience different seasonality. Tank tops may be in higher demand in summer vs. outerwear in winter for example.
Time Frame - The time frame allows for the creation of a curve for a specific number of weeks. It is recommended that sales curves are defined for a full year to ensure that products flowing from one year into the next have the necessary builds to manage the transition.
Rolling Weeks - Provides the ability for smooth the curve over a number of weeks, users may do this to make their lows and highs less pronounced when planning demand.
Update Cadence - The update cadence is used to keep the sales curve fresh when using a relative time period like the last 52 weeks. If you do not want the sales curve to be updated, set the update cadence to Manual
After making your selections, click on the CREATE button.
Step 2: Review and adjust the sales curve as needed
In this step, users have the ability to select the sales curve created and review the output in the screen below. This allows for the adjustment of either the builds to reach the desired relative shape of the time periods to one another. Users can adjust for known anomalies that can not be picked up in historic demand such as business interruptions or pandemics.
Step 3: Apply the sales curve to an allocation strategy
In this step, you have the option of selecting an appropriate sales curve per allocation strategy, you can copy and paste the sales curve to affect multiple allocation strategies. The demand for the allocated product will be shaped according to the sales curve over time as a result.