Tuesday
Jun242014

The importance of comparing actual sales to plan

Most retailers when speaking about sales triumphs (or defeats) refer to sales over last year. “We achieved a 10 percent increase over the previous year!” When forecasting, it is important to monitor the actual sales trend to plan.

 

Planned sales are, hopefully, what the business has planned for. Marketing and promotional plans were put in place, merchandise was purchased, all to plan. A delta or difference in sales between actual and plan can have significant inventory implications if receipts / markdowns are not addressed. 

 

Click to enlarge.

 

As in the example above, if sales are consistently above plan – the retailer will eventually run short of inventory. And this is, perhaps what has happened.

 

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Business was steadily increasing until the end of the season. It is possible there was not enough inventory to sustain the growth or trend line.