Overcoming a forecasted sales shortfall


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From the graphic above, our sales have been missing their plan in the first four months of the spring season. How do we recover from this, and forecast June and July?


Unless the sales shortfall is the direct result of an inventory shortage, most planning managers will not accept a sales forecast to plan – regardless of the plan of action. A consistent downward trend is typically a result of a macro issue:

  • Traffic is down overall
  • Product brand / category matrix is off
  • Price matrix is incorrect
  • Competition
  • Promotional plan may not be correct
  • Customer may no longer be buying from you


The way back up to exceeding sales plans can often take over a month.


There are things a business manager may do to overcome the shortfall, and manage the shortfall.





Keeping season-end inventory in-check is a priority. Missing sales plans can result in inventory ballooning, which will need to be kept in check. Merchandise returned to vendors, cancelled orders, and increased markdowns are common ways to reduce inventory.


If sales are down because of an aged inventory issue, a stock swap will help bring in fresh goods (in exchange for unsold aged merchandise to the vendor). This can be a great way to refresh merchandise without marking down the aged inventory (saving gross profit). Keep in mind, this does not impact the overall inventory levels.




Looking at the promotional calendar in June or July is also a good idea, if it is part of your businesses strategy. A more aggressive calendar may be required if it tends to drive traffic and sales in your store.


Alternatively, eliminating promotions that do not drive the top line, and serve only to erode margin (and brand value) may also be an option. Caution is advised with this strategy, as this is counter to how the greater industry moves. Read: The markdown shift.




Often, there is simply an assortment issue: too much of a particular key item, too much breadth, etc. The assortment changes required vary by retailer and customer base. A stock swap could help. It could be the introduction of a missing key item that was needed to boost sales.


An assortment change at a high level could also be in order. There may be particular brands or categories that are exceeding their sales plans – and others that are dragging the performance down. The business manager will need to feed the performing brands/categories (secure additional product), while reducing the commitment to the underperforming brands (so as not to grow the overall inventory levels for the retailer).

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In the same way that particular brands or categories may be driving sales, the same may apply to stores. Promotions in particular stores to drive traffic, and additional inventory to feed the over performing store may be in order.


Inventory re-distribution may also be the best option.