The markdown decision came on a Thursday afternoon. The merchandising team had flagged a 22% overstock position on a seasonal line. Finance needed to model the margin impact before the weekend buyer meeting. Supply chain needed to know whether to cancel the next shipment or redirect stock across regions.
Three teams. Three systems. Three versions of the inventory position — none of which agreed.
By Friday, the buyer meeting happened without a clear financial recommendation. The markdown was approved on instinct. The margin hit appeared three weeks later in the month-end close.
This is retail's planning problem in its most recognisable form. It is not caused by poor tools, weak analysts, or bad forecasting. It is caused by a structural disconnect between the three functions that drive retail financial performance — merchandising, supply chain, and finance — each planning in its own system, on its own cadence, against its own version of the same business.
Key Takeaways
- In 2026, retail performance is defined by how effectively leaders coordinate decisions across merchandising, supply chain, finance, and stores — continuously, not periodically, according to Board's Retail Trends 2026 report
- Most retail planning solutions still operate in functional silos — optimising parts, not performance, with fragmented planning leading to misaligned inventory, missed demand, and margin erosion
- Traditional retail organisations treat FP&A, merchandise financial planning, supply chain planning, store planning, and payroll as sequential, disconnected processes — the result is a constant struggle to unite revenue, margin, and inventory goals, according to Anaplan
- Connected retail planning — where a single demand signal drives financial, merchandising, and supply chain decisions simultaneously — consistently delivers faster markdown decisions, lower inventory distortion, and stronger gross margin performance
- The organisations closing this gap are not those with the most tools — they are those that replaced functional silos with a single, governed planning architecture
The Problem Every Retail CFO Recognises
Retail revenue is not a tidy line item. It is the output of assortment decisions, demand signals, pricing movements, promotion timing, channel mix, and inventory availability — all interacting simultaneously, all seasonal, and all capable of moving independently of each other.
Most financial planning tools treat it as a line item anyway.
The merchandising side of the business plans bottom-up: open-to-buy, assortment, allocation, and merchandise financial planning by category, store cluster, and season. Finance plans at a highly aggregated level. The result is a constant struggle to unite revenue, margin, and inventory goals.
The consequence is not just inefficiency. It is that the three functions most responsible for retail financial performance — merchandising, supply chain, and finance — are making interdependent decisions from independent data. When one moves, the others do not automatically follow. And by the time the financial plan reflects what merchandising and supply chain have already done, the opportunity to act on the information has passed.
Three Disconnects That Cost Retailers the Most
Merchandising plans by SKU, category, season, and store cluster. Finance plans by business unit, channel, and P&L line. When the two teams need to align — during a markdown review, a promotional planning cycle, or a season closeout — someone has to manually bridge two incompatible levels of detail. That bridging takes time, introduces reconciliation risk, and often produces a compromise that neither team fully trusts.
An integrated planning approach recognises this interdependency, aligning high-level financial objectives with the operational realities of retail. From a financial perspective, inventory is working capital tied up on the balance sheet. Every day an overstock position is not acted on is a day of working capital cost that a connected plan would have made visible sooner.
A demand shortfall, a supplier delay, or a replenishment exception should immediately trigger a financial re-projection. In most retail organisations, it triggers an email. Finance learns about operational exceptions when they show up as variances in the weekly trading report — at which point the decision window has already closed.
Leading retailers are aligning around one shared demand signal instead of fragmented forecasts — moving from disconnected tools to platforms that connect merchandising, supply chain, and finance. That shared signal is what allows a supply chain exception to trigger an immediate financial scenario, not a three-day reconciliation exercise.
Every retail season starts with an approved financial plan. By Week 3 of the season, trading data has already moved the underlying assumptions — but the financial plan has not moved with them. Finance is managing against a plan that no longer reflects how the season is actually developing.
This is the same continuous planning gap we examined in our post on
continuous planning vs annual budgeting — applied to the specific rhythm of retail trading cycles. A rolling, connected planning model that updates when trading data moves is not a luxury for high-performing retailers. It is the baseline requirement for making in-season decisions with financial visibility.
What Connected Retail Planning Looks Like in Practice
A fashion retailer is six weeks into a Spring season. Sell-through on a key womenswear category is tracking 18% below plan. The markdown team has two options: take an early markdown to clear stock, or hold pricing and accept the inventory risk.
Disconnected Environment
Merchandising pulls sell-through data
Supply chain checks open order position separately
Finance models two margin scenarios in a spreadsheet
Decision takes four days
By the time the recommendation reaches the trading director, the optimal markdown window has partially closed
Connected EPM Environment
Sell-through signal flows automatically into the financial model
Margin impact of early markdown vs held inventory calculated in real time
Supply chain team sees stock-flow consequence immediately
Decision takes four hours
Trading director has a financially complete recommendation before the afternoon trading call
The decision is the same. The speed and confidence behind it are not.
This is what Keansa's Retail practice builds — not a new forecasting tool layered on top of existing silos, but a planning architecture where merchandising, supply chain, and finance operate from a single version of the trading reality.
The Planning Architecture That Makes This Possible
Three structural changes separate connected retail planning from the functional-silo model most retailers are still running.
1
A single shared demand signal
Rather than merchandising, supply chain, and finance each maintaining their own demand forecast, a connected retail planning environment establishes one governed demand signal that all three functions plan against. When the signal changes — because of trading data, promotional performance, or supplier inputs — all three plans update automatically rather than requiring manual re-alignment.
2
Driver-based margin modelling
Retail gross margin is driven by a small number of operational variables: average selling price, markdown depth, promotional mix, shrinkage rate, and supplier cost. Building the financial model around these drivers — as we described in our post on
driver-based planning — means that when any driver moves, the margin projection updates automatically without requiring the finance team to rebuild the model.
3
Real-time data integration from trading systems
The connected planning model is only as current as the data feeding it.
EPM platforms including Anaplan, Jedox, and OneStream — Keansa's core delivery partners — integrate directly with ERP, POS, and warehouse management systems, so that trading data flows into the financial model daily rather than weekly. This is the operational change that makes in-season decision-making financially informed rather than commercially instinctive.
What to Fix First
Not every retail organisation needs to solve all three disconnects at once. The highest-return starting point depends on where the planning gap is costing the most.
If the primary problem is markdown timing
Decisions being made too late, based on incomplete financial visibility — the priority is connecting sell-through data to the financial margin model. That connection alone reduces the time between a demand signal and a financially informed markdown decision.
If the primary problem is inventory distortion
Consistent overstock and stockout positions despite adequate planning — the priority is establishing a shared demand signal across merchandising and supply chain. As we examined in our post on inventory visibility vs inventory accuracy, the most common cause of inventory distortion is not poor forecasting — it is planning functions operating from different data, making interdependent decisions independently.
If the primary problem is margin leakage
Plans that look right at the start of the season and deteriorate by Week 6 — the priority is driver-based financial modelling. When margin is expressed as a function of operational drivers rather than a negotiated P&L line, the finance team can see margin pressure building in real time rather than discovering it at the period close.
Keansa's supply chain planning and FP&A engagements in retail consistently begin with this diagnostic — identifying which disconnect is driving the most financial cost — before recommending a platform or a process change. The sequencing matters as much as the solution.
Conclusion
Retail's planning problem is not a forecasting problem. It is a coordination problem.
Performance gaps in retail persist not because of a lack of capability, but because of disconnected decisions, delayed insights, and misalignment between financial targets and execution.
Merchandising, supply chain, and finance are each capable of planning well in isolation. The problem is that isolation itself — the structural separation between functions that are commercially interdependent — is what causes the margin leakage, inventory distortion, and missed decision windows that show up as underperformance at season end.
The retailers closing that gap are not those with the most tools. They are those that replaced three separate plans with one connected planning architecture — where a demand signal, an inventory position, and a financial projection are always the same number, always current, and always visible to the team that needs to act on it.
Frequently Asked Questions
Q What is EPM for retail?
EPM for retail refers to Enterprise Performance Management adapted for the specific planning requirements of retail businesses — where financial forecasts must connect to merchandising decisions, inventory positions, and supply chain signals simultaneously. Unlike generic financial planning, retail EPM integrates merchandise financial planning, demand planning, and FP&A into a single connected architecture so that trading decisions and financial projections stay aligned throughout the season.
Q Why is retail financial planning harder than other industries?
Retail revenue is the output of assortment, demand, pricing, channel mix, and inventory availability interacting simultaneously. Most financial planning tools treat it as a single line item. The result is a structural gap between the level of granularity at which merchandising plans (SKU, category, store cluster) and the level at which finance plans (business unit, channel, P&L). Bridging that gap manually is the primary cause of delayed markdown decisions, margin leakage, and inventory distortion in retail organisations.
Q What is the connection between supply chain planning and retail FP&A?
Every supply chain exception — a demand shortfall, a supplier delay, a replenishment gap — has a direct financial consequence: working capital impact, markdown risk, or lost sales. In a connected retail planning environment, supply chain signals flow automatically into the financial model so that the finance team sees the margin implication of an operational exception in real time, not three weeks later in the trading report. This is the integration that transforms the supply chain from a cost function to a financial lever.
Q Which EPM platforms support connected retail planning?
Anaplan, Jedox, OneStream, and Board all support connected retail planning requirements including merchandise financial planning, demand integration, driver-based margin modelling, and multi-channel financial consolidation. The right platform depends on the specific retail format, existing ERP and POS landscape, and planning complexity. Keansa's Retail practice conducts platform-agnostic assessments to identify the right fit.
Q Where should a retail CFO start with connected planning?
Start with the diagnostic, not the platform. Identify which planning disconnect is costing the most — markdown timing, inventory distortion, or margin leakage — and sequence the solution accordingly. A shared demand signal, driver-based margin modelling, and real-time data integration from trading systems are the three structural changes that consistently deliver the highest return in retail planning transformation.
Related Resources
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