“One of the biggest challenges that companies face is predicting demand for new products over time. Overestimate it, and risk warehouses full of excess inventory. Underestimate it, and your customers could leave empty handed—or you might be left with a hefty bill for expedited delivery.” – Kellogg School of Management, Northwestern University
Innovate or die trying.
The phrase is almost as overused as “retail apocalypse,” yet a concise depiction of what retailers face constantly when we think about the video-gone-viral level of speed behind the changing retail landscape and unpredictable nature of demand.
As if determining the optimal assortment wasn’t already difficult enough, introducing new products to your strategy when some fashion trends barely last is a risk merchants must take.
When it comes to new products, retailers are getting burned (more often than not) when a quick pivot or adjustment to changing demand is unmet. Today, these losses hurt big time, especially considering retailers are clenching onto their purse strings more tightly than ever.
Why is it so difficult to accurately predict consumer demand for a new product? And, more importantly, how can we overcome these difficulties?