Demand forecasting solution helps retail chain increase sales
Company Overview The client is a reputed retail chain having several stores across USA.
Problem Statement & Challenges
Inventory management is the most critical aspect of retail business. Overstocking items led to higher inventory costs while understocking led to quicker sales of items.
As a result, the client faced a few challenges –
- Reduced operational efficiency
- Higher cost
Objective
To reduce the shelf life of perishable and non-perishable items using advanced analytics techniques and forecast the demand for each combination of the store and product.
Our Solution/Approach
The client provided a dataset which had information about transactions, products, store information, and sales returns. Data was collected since 20 months which pertained to about 59 million transactions. The transactional data for 20 months provided sufficient insights and helped to predict future demand.
The Solution Entailed
Exploratory Data Analysis to understand seasonality and trends, stores with highest sales in a particular duration, geographic location of the stores, items on promotion, etc.
Results / Impact
The analysis and study helped the client in the following ways –
- Understanding stocking requirements of perishable vs. non-perishable items
- Incorporating external and internal factors that will affect the sales of the retailer
- Demand/sales forecast of the items in each category/subcategory to the SKU level
- Planning purchase efficiently and better maintenance of the inventory
- Reduced inventory meant reduced wastage
