Demand forecast
A demand forecast is the expected future sales of a product, usually per location and per week, used to plan buys, stock and space.
- Is
- Expected future sales of a product, usually per location and per week.
- Built from
- Sales history adjusted for season, promotions, price changes and stockouts.
- Watch for
- A single number. A range shows the cost of being short against being over.
Updated
Meaning / 01
What it means for retail and category teams
Forecasts start from sales history and adjust for known effects: seasonality, promotions, price changes, new stores, range changes and events. Stockouts in the history need correcting, or the forecast learns from demand that was never served. Forecasts are usually most accurate at an aggregate level, such as a category by month, and least accurate for one product in one store in one week.
Stakes / 02
Why it matters
The seasonal buy, store allocations and next week's orders all start from a forecast. A single number hides how wrong it could be; a range shows the cost of being short against the cost of being over, so the team can size the buy and the follow-up order to match.
Example / 03
Illustrative example
The business and figures are illustrative. None of it is customer data.
| Item | Forecast units | Result |
|---|---|---|
| Mild summer | 400 | 250 left over |
| Expected | 600 | 50 left over |
| Hot summer | 900 | 250 short |
| Reference line | First buy: 650 | |
One buy of 650 is safe in two of three summers, and a repeat order covers the third.
Read the example as text
A new sunscreen's six-week forecast is 600 units, with a likely range of 400 in a mild summer and 900 in a hot one. A first buy of 650 leaves 250 over if it is mild and runs 250 short if it is hot. The team buys 650 and books a repeat order it can confirm in week 3, once the first weeks of sales show which summer it is.
Related / 04
Related concepts
Next step
Work through an availability decision
Bring a product that keeps running short or sitting too long. We can examine the stock, demand and options together.
