Retail operates at a constant, unforgiving sprint. With today’s global trade volatility and fast-moving trends, poor forecasting has become a high-stakes vulnerability. A slight miscalculation — whether missing the boat on the next TikTok trend or being hit with a last-minute supply chain disruption — can lead to unhappy customers and margin erosion.
To outpace the competition in 2026, retailers must stop simply reacting to market shifts. Instead, they should proactively transition forecasting from a static annual ritual into a continuous, multilayered discipline that connects granular detail to company strategy. Retailers that can master this practice will minimize risk and position themselves to capture growth opportunities.
The Hidden Gap Between Strategy and Margin
When apparel forecasting goes wrong, it’s typically because retailers have only analyzed categories at large. This is insufficient. Profitability is unlocked when high-level strategy and forecasts are connected to granular, operational detail. For example, when reviewing an apparel category holistically, a retailer may infer that “women’s tops” will perform well this spring. However, a more nuanced analysis would show that women in big cities are willing to pay full price for the blouse currently going viral online, but activewear shirts will fly off the rack at 10% off in small towns.
While both findings ultimately show that women’s tops are selling well, the details are what determine how profitable a specific assortment will be. That’s why the most critical business decisions — the ones that help avoid unforeseen volatility — are actually made when top-level strategy is linked to the SKU and store levels.
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To mitigate risk, retailers must balance signals like product attributes, locations and allocations. The thread that ties these variables together is time — specifically, how a retailer’s perspective must shift as a product moves from a strategic concept to a physical shelf.
Mastering the Continuous Planning Loop
Perhaps the most crucial factor to consider when forecasting is time. While retail often works in seasonal cycles, daily decisions are equally important to master. In the past, retailers managed these timelines in isolation, passing data between departments. To outpace the market today, forecasting must move from a linear hand-off to a layered, time-aware discipline where decisions balance accuracy, flexibility and risk across three distinct planning periods: long-range, medium-range, and short-range.
During the long-range forecast, which covers 12-24 months out, teams focus on strategic direction and align the business broadly. This is when finance teams set margin and revenue, supply chain teams coordinate capacity and marketing begins to shape promotional campaigns.
Three to nine months before the buying season, also known as the medium-range horizon, is when retailers begin planning orders and negotiating with suppliers. This phase is designed to align buying cycles and factory commitments while guiding decisions on product mix and volume. The primary challenge here is striking the balance between accuracy and flexibility: excessive risk leads to markdowns, while excessive caution leaves money on the table.
Finally, the forecasting decisions within the final three months are the most unforgiving. Once assortments are set and products are in stores, teams must react quickly to real-world scenarios. Agility in this window is essential — it can be the difference between catching a trend and pushing shoppers to the competition.
As a result of these mounting complexities, retail organizations must reimagine how they transition between varying levels of category and product-specific detail across a range of dynamic timelines.
Incorporating Decision Excellence into Apparel Forecasting
When taking into account the sheer number of time-sensitive forecasting considerations for every SKU, it’s clear that traditional forecasting approaches are no longer sufficient. The scale of data and the speed of change in modern retail is impossible for even the most experienced retail planner to navigate in a spreadsheet.
What’s more, without a unified and consistently up-to-date forecasting system, cross-functional teams are more likely to make contradictory decisions based on false assumptions, creating friction and inefficiency.
That’s why effective, modern forecasting relies on AI and machine learning to combine numerous forward-looking signals including price elasticity, foot-traffic predictions, localized demand patterns, and competitor activity. AI augments planners by helping them move away from tedious data entry and towards high-value strategic decision-making.
For instance, neural networks are especially powerful for retail forecasting because embeddings turn messy inputs — like SKUs, stores, colors/sizes, vendors, and even customer segments — into dense vectors that capture similarity and substitution patterns (e.g., “this sneaker behaves like those sneakers”) without hand-built rules. That lets the model share learning across related items and contexts, improving accuracy for sparse or new products, and helping it generalize through shifts in mix, promotions and seasonality. Combined with temporal architectures, the network can learn nonlinear interactions (price × promo × weather × channel) that traditional linear models often miss.
AI-driven planning systems continuously update forecasts, run potential scenarios and generate recommendations. This data-driven approach improves the relationship between the forecast and true optimization. It unlocks predictions and helps retailers make critical decisions, like how to redirect stock, meet new trends and update pricing.
Importantly, dynamic forecasts built around business-specific intelligence will guide mission-critical retail decisions from years out until the last minute. They empower finance teams to set realistic targets, merchant teams to set the right mix, supply chain teams to accurately manage logistics, and marketing teams to generate campaigns with real impact.
Making Forecasting a Strategic Advantage
Conventional wisdom might suggest that the most powerful forecasting is the one that gets closest to the right number. While there is certainly merit in delivering the highest forecast accuracy possible, the real power lies in the chain reaction the forecasts trigger.
In-season signals that guide allocation (what’s heating up, what’s cooling off, what’s substituting, where demand is diverging) should instantly cascade into the bigger calls: how hard you chase, whether you promote or protect margin, and how you shape the next collection’s buys, size curves and color bets.
When that loop is tight, planning stops being a set of disconnected meetings — and becomes one continuously learning system that turns today’s demand into tomorrow’s advantage. This is decision excellence at its best.
EJ Tavella is EVP, GM of Integrated Business Applications at Anaplan. With over 25 years of strategic and operational experience, he has held various roles, including supply chain practitioner, tech founder, strategic consultant and advisor to supply chain and retail planning leaders. Prior to joining Anaplan, Tavella was a Managing Director at Accenture (End to End Analytics acquisition), where he was a leader in the Analytics and Supply Chain practice, working directly with numerous global tech customers and retailers to drive transformations and infuse analytics into their processes. Previously, Tavella was a founder of Steelwedge, a leading S&OP SaaS software provider as well as a planning leader for an early ecommerce company in the late 90’s. In his spare time, you will find him either playing golf or hiking in the hills with his wife and three daughters.
