In the ever-evolving world of retail, demand planning is fast becoming the unsung hero of supply chain strategy. Once seen as a purely operational task, it’s now emerging as a strategic backbone for agility, efficiency and resilience.
Our latest Retail Hive Pulse report, produced in partnership with DHL, reveals that while 98% of retailers use demand planning to guide their decision-making, many are still struggling to unlock its full potential.
The Strategic Shift
Retailers are no longer viewing demand planning as simply forecasting what to buy and when. For 48% of businesses, it’s a critical function used to adjust inventory levels and promotions, while 32% say it now directly informs core strategic decisions – from capacity planning to market expansion.
But as one member put it, “Neglecting demand planning comes with risks.” Overestimating demand can lead to costly overstocking; underestimating it can result in missed sales and dissatisfied customers. The fine balance between precision and flexibility is where the best-performing retailers excel.
Breaking Down the Siloes
For many businesses, the biggest obstacle isn’t technology or talent – it’s alignment. Over half (53%) of retailers cite inconsistent data as their biggest barrier to effective collaboration between teams, while 29% point to siloed communication.
The result? Demand planners working in isolation, disconnected from marketing, warehousing, or commercial teams. As Nigel Parker, EMEA Distribution Manager at Simplehuman, put it:
Warehouses need a seat at the planning table to manage capacity and flag potential issues early.”
Integration and communication across departments are key to ensuring demand planning delivers on its promise.
Data, Technology and the Road Ahead
Despite advances in AI, analytics and real-time visibility tools, adoption remains slow. Only 10% of businesses have implemented advanced forecasting technology in the past three years – meaning most are still relying on manual spreadsheets and outdated systems.
However, there’s clear recognition of what needs to change. Nearly a third of retailers plan to invest in new demand planning software, and 45% say improving forecast accuracy through better data analytics will deliver the greatest ROI.
A Sustainable Future
As sustainability takes centre stage, accurate forecasting has become an environmental as well as an operational priority. Nearly 40% of retailers report that better demand planning has directly reduced waste and the most forward-thinking businesses are already combining flexible supplier contracts with smarter data to minimise excess inventory and optimise production.
Demand planning isn’t just about predicting what’s next – it’s about preparing your business to thrive in uncertainty.