Merchandise Planning with Gen AI: Drive Sales and Profitability

4 min readJul 14


You cannot run a successful retail business from memory. — Josh Hartford

From forecasting to planning to inventory to customer experience, you need a unified system tracking everything and making intelligent recommendations.

Merchandise planning is not an exception. A well-trained, AI-powered solution can change the planner’s life drastically. Merchandising moves goods towards people. For that you need to be able to plan intelligently to put the right product, at the right price, at the right time, in front of the right people.

The secret of successful merchandising in 2023 is AI. The global AI in retail market is expected to grow from USD 4.84 billion to USD 31.8 billion, at a CAGR of 30.5% in 2021–2028 period (source).

Let’s see how Gen AI and large language models can be the driving force for the growth and profitability of your retail business.

4 Pillars of Merchandise Planning

Picture this: you have a store stocked to the brim with products. But, they sit untouched, collecting dust. A nightmare situation!

Avoid retail nightmares with the 4 pillars of merchandising.

1. Product Assortment

The most challenging part of any retail business is the right product mix. You don’t want to run out of stock when there’s demand for the product. At the same time you don’t want to overstock the product to clear it at a huge discount later making a loss.

Creating a right product assortment is crucial for good customer experience and sales that go up month by month.

Tips for Product Assortment

Know your target customer
Keep a check on market trends
Take seasonality into account
Collaborate with the right suppliers
Execute Inventory Analysis
Analyze customer’s shopping habits and patterns

Automate Product assortment with Pluto7’s Retail Planning Solution.

One of California’s largest supermarkets was able to gain deeper, more realistic and prediction-based insights with Pluto7’s Retail solutions to improve inventory assortment. Read the case study.

2. Pricing Strategy

Product price is the top factor that influences purchasing decisions. Before you start selling, you need to determine the worth of your product in a way that it drives profitability while remaining competitive in the market.

An effective price strategy takes into account market share, sales volume, business goals, revenue, promotions, dynamic pricing. Choose a pricing strategy that fits your business objectives.

How to choose a Pricing Strategy

Value metric of the the product
Production cost, overhead expenses, and other costs that business need to cover
Pricing set by competitors
Spending capacity of your market

3. Placement and Presentation

The way you display your products in stores plays a huge role in attracting potential customers.

A well-thought out visual merchandising can boost sales, drive brand loyalty, and provide a memorable shopping experience.

Color psychology, visual hierarchy, store layout, product placement, packaging, signage, and other strategies add to shopper’s delight. It makes them remember you and come back to the store.

Placement techniques to drive sales

Aesthetically appealing and innovative product display
Signs that are easy-to-read Signs
Group related items together
Create a welcoming, friendly atmosphere
Point-of Purchase (POP) Displays

4. Planning and Forecasting

Demand forecasting and planning are the core of any business. Knowing customer’s buying patterns and trends can help plan merchandise better. It will ensure optimal inventory levels, timely replenishment of products to meet customer demand.

Looking at loads of data and predicting future demand is not an easy task. It is not something that can be done using excel sheets and in closed meetings. Best retailers use Gen AI-powered demand planning solutions to combine their historical data with ever-changing market trends, datasets like weather, Consumer Price Index (CPI), Google Ad tech to accurately predict merchandise.

Benefits of Accurate Demand Forecasting

Inventory Optimization
Reducing problems of overstocking and understocking
Reducing cost by eliminating unnecessary markdowns
Improving customer experience
Enhancing productivity

An American department store retail chain achieved 85% accuracy with their demand forecasting by leveraging Pluto7’s expertise and Google Cloud Platform. Read the case study.

CLICK HERE: To Transform your Merchandise Planning

Merchandise Planning Challenges: Solving with Gen AI and Large Language Models

Market fluctuation, changing customer preferences, reduced purchasing power, increased product variety, competition, material sourcing are some of the daily challenges in the life of a retailer. In addition, they need to deal with huge amounts of data, analyze it, make demand predictions, plan merchandise, plan assortment, manage inventory, all the while maintaining profitability.

Smart, advanced tools trained on historical data with added intelligence provide actionable insights that can take most of the load of planners. I will not say it would be as easy as sipping coffee and taking decisions but close to that.

AI-powered solutions keep learning and keep improving continuously. More you use them, the more helpful they become. In no time, you would be sipping coffee and making your business decisions. Checkout how they are solving common challenges of merchandise planners.

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