In order to have a successful retail business, you must follow good product demand forecasting methods.
As a shop owner, you need to have the right products at the right price, at the right time.
You need to have a constant supply of products your customers love, solve their problems, and meet their needs.
However, finding the right products to sell in your store that your customers will want to buy can be like finding a needle in a haystack.
How can you tell this is the right product to stock for the coming season?
How do you know what people want to buy and what size they will need?
So today I'll share the recipe for forecasting product demand.
The following 7 steps will help you validate your products properly before you order from your wholesale clothing supplier and ensure you don't waste time and money on products that just won't sell.
But before we get started, if you just stumbled upon this site, welcome to our blog. This channel is for small business owners who are looking to start and grow their companies.
In other words, if you're a shop owner, you'll find a ton of great content covering all aspects of running a business here.
Without further ado, let's get started.
You can use these 7 steps as a framework. For today's product launch example, I'm going to use a “Mens Gilet”.
Okay, so we will begin by asking a few questions about the market demand for the product.
Step 1. Evaluate market demand.
Ask yourself - How big is the potential market or how much demand is there for my product/s?
An easy way to check what the market is saying about your product is to use a free keyword research tool like Ahrefs to find out how many people are searching for your potential product/s per month.
You should use this tool to find words related to your product idea too. In the image below, you can see that people also searched for more specific gilets, among the most common being fleece gilets (see image below).
I used Ahrefs free keyword search tool to look at the searches of “mens gilet”, and I found that there are over 14,000 per month.
In addition, I used BuzzSumo (a free tool to check for social media activity) to determine just how many mentions of our main keywords there were on social media. I found that there were approximately 50 tweets per day that mentioned our main keywords “mens gilet”.
Although this information doesn't guarantee our new product will find buyers, it does point to a high level of interest for our product.
The next step is to find out who your competitors are.
Step 2. Analyze your competitors who carry or sold your product last year.
Ask yourself - Who are my main competitors?
You're less likely to encounter surprises later if you know what the competitive landscape looks like beforehand.
Based on our analysis of our example, we discovered there are three competitive areas:
1. Fast fashion retailers
2. Local brick and mortars
3. Designer brands
We can use the presence of our competitors to our advantage, especially when it comes to determining our price point (more on this later).
Step 3. Identify the seasonality and lifespan of the product/s.
Ask yourself - Is the product a trend, fad, flat or growing market?
Understanding the direction of where the market is heading is just as important as knowing your potential market size. You don't want to be faced with the realisation that you've missed the boat and the market is quickly declining, just because you didn’t do your product research properly, right?
In this case, we us Google trend (a free tool by Google) that can help you see how our product, in our case “mens gilet”, has evolved over time.
According to the Google trend for our product, search interest is growing significantly in the months of October to December. While “mens gilet”may be trending right now, the fashion industry is always experiencing marketing shifts that force items onto the scene as a breakthrough.
In other words, it is important to recognise that at some point in time, this trend might fade out, ultimately leading to a decline in demand.
Step 4. Determine your target customer for this or these products.
Ask yourself - Who are my target customers?
This is an obvious one, but knowing who your potential customers are is essential before deciding on stocking a new product or product line. You don't want to discover too late that your current customers are guys living in a region where it may get cold, so stocking a padded gilet is a no-brainer when versus a non-padded one.
You can also use social media to get a sense of who your potential customer could be.
For instance, you can first search Twitter for tweets that mention your keyword, and then secondly, take a closer look to figure out who these people are. Based on our keyword analysis, “mens gilet”, the majority of our tweeters were naturally men. In addition, based on credible profile images, we can assume the average age is 18 to 35 years old.
Finally, having analyzed Google trends, we know that our target customers are mostly located in Scotland in the UK. We know from a quick Google weather search that Scotland is most likely to experience temperatures between 8°C (46°F) and 14°C (57°F) from September to November.
In December, Scotland experiences the most rain with an average of 20 days of rain or snow, hence it would be smart to style your feather gooses gilets with raincoats for promotional campaigns in December.
Now let's move on to the product-based criteria of your product research process. You'll use these questions to assess factors related to the product, enabling you to identify your product's strengths and potential weaknesses.
Step 5. Find your potential price point.
Ask yourself - How to determine the right price point?
A lower price means a lower profit per unit.
You need to find a sweet spot where you can make a handsome profit per unit, while not making it too expensive that customers won't purchase from you.
Small margins also mean less money for marketing. So, when the time comes, it might be difficult to promote the product/s using paid advertising channels.
Step 6. Calculate your markup potential.
Ask yourself - What is my potential markup?
The markup is the amount you charge after the cost of your product. This amount covers your expenses and makes you money. Lastly, when you're thinking of your potential markup, remember that it may also change over time as your business grows.
Check out how to determine the right price point? for more information on these two last topics.
Step 7. Do inventory forecasting to determine how many SKU's you need.
Ask yourself - What will be the number of items you will need to stock?
Generally, the larger the number of products you need to stock (aka SKUs [pronounced: SKEWs") means more headaches. In other words, a lot of SKUs increase your inventory and storage costs.
Under-stocking and deadstock clothing can be prevented by reviewing your previous sales records for sizes.
Think about the following.
In what size range do most of my customers fall?
How many of them have shown interest in products similar to the Gilet in the past?
Be sure to narrow down your customer persona before ordering from your supplier. Verify that the sizes are in the same EU sizes as you are used to from your wholesale suppliers.
Branding will play a large role in the potential success of a product. In addition, you must ensure the product is of customer perceived value and demonstrate that it is more beneficial for men to invest in this gilet than other gilets and products like sweaters and vests alone.
A unique selling proposition (USP) can also make the difference between blending in and making the sale.
Now, if you are fed up with this guessing game and looking for a stock solution, then you’ve come to the right place.
Switch from ordering set styles and fixed sizes in bulks, to on demand manufacturing.
You read this article and thought, "ehh I'm not really interested in doing all of that work to see if a Men's Gilet will sell well" - We hear you!
Well then find out how you can operate without this headache, but, also being able to offer the Men's Gilet, soon to be a big hit in your cold region. Keep reading to learn more.
Design your own Suit
Make your own Jeans
Made to measure Chinos
Above are some trending search terms in Google coming from the UK and Ireland during the past few months. Menswear shop owners can now easily offer customers what they are searching for. Offering them the option to customise garment designs, colours, fabric weight, sizing, and much more by using RJ MTM's End-to-End Apparel Retail system.
Interested in seeing this for yourself?
Take a Visual Tour with my colleague Frank. All you need to do is to click the button "talk with a human" on our site, telling us briefly about your business and a date and time that works best for us to call you. A no strings attached chit-chat to find out how your business can be transformed into a menswear super-powered temple.
I hope that you have found this example helpful. Make sure you are asking yourself the questions mentioned in this article. Don't just jump into something without doing the proper research first. By using this method, you will be able to tell if your product is something your customers want, and if they do, you will be more confident about bringing it into your store.
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Cheers,
Camilla
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