Business Forecasting Software
Published May 17th, 2017 by

Balancing Demand And Supply in Retail

Historically, the retail industry has often been favoring either demand or supply. And as it happens with most unsteady, volatile relationships, it has remarkably see-sawed from one side to the other, which has led to major economic implications. One of the most prominent and noteworthy market misadventures would be during the period of the Great Economic Depression in the U.S.A which happened between 1929 and 1930.  A swift, sudden crash of the stock market – result of an overconfident market outlook but not having tight and fine tuned economic policies. Higher supply with the abundance of manufactured products with little or no demand leading to a panic based higher investments.

The most universally basic theories of demand is what drove World War II in playing a critical role in the recovery of U.S.A’s economy. Because of the ongoing war and its scale increasing, a large amount of government expenditure had to be directed towards the manufacturing of military weaponry and technology. This in turn boosted the mobilization of manpower, creating more jobs in the market and reviving the economy. Hence, before America entered into the war, its market stabilized again thanks to the spending on defence, which satisfied global demands and evicting the traces of the Depression. Since then, the U.S. seen the growing trend having experienced its greatest industrial and economic boom growing by 37% in 1950s.

The aforementioned instance is a good example that represents the purpose and  the side effects of the coin which in this case would be the retail market and the two sides being demand and supply. It helps in the realization of the perils of not understanding the customer motivations for satisfying needs and desires. On the other hand, it helps reiterate the fact that strategy infused supply channel development can briskly turn the tide in the favor of the business, leaving competition behind.

Today’s retail business is highly customer focused, courtesy the penetrative expansion of the global market, producing a wide range of product/service options from across the globe. For retail business owners, the need to adopt and use technology has thus magnified as it equips them with the right Business Intelligence (BI) to easily capture and process complex customer data. This information can be further broken down in appropriate data sets and to be analyzed to understand customer behavior patterns and economic potential.

ETP Demand and supply

Image courtesy – ETP Group


A powerful BI Solution helps retailers determine accurately the DEMAND by answering the following question:

  • What are the customers buying?
  • When and where are they buying and how much are they buying?
  • Why are they buying?
  • Are they buying for themselves or someone else?
  • Are they buying from the competition and why?
  • When will they make a repeat purchase at the same store?
  • What are their product preferences?
  • Are they receptive they to product modification?
  • What is the wallet size of the customer?
  • What are the new customer demographics that can be prospected?
  • What promotions campaigns and channels could works?


Basis the answers derived from the above questions, the retailer can optimize the SUPPLY chain by finding answers to the following question:

  • How many product lines will he need to manufacture/source in the upcoming season/cycle?
  • Who are the best vendors for particular products?
  • What should the pricing strategy be?
  • How to plan the mark-downs without accumulating losses?
  • How soon can the old stock be processed or sold?
  • How best to utilize the dead stock?
  • How many distributors will be enough?
  • When, where and how to restock at store, warehouse level?

Retailers can themselves or through the help of experts determine the economy growth, government policies, sanctions and market growth, risks and recovery methods while understanding customers’ motivations, aspirations, preferences, dislikes, future needs and market trends.

Effective retail software solutions can catalyze this process of demand-supply balancing for a retail business as they make it easier to integrate the right Business Intelligence (BI) solutions to optimize present and future market conditions in terms of the customers and competition.

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