Demand Planning in Fashion Retail: A Practitioner Framework Linking Top-Down and Bottom-Up Forecasting

Demand planning is a core capability in fashion and consumer goods companies, connecting commercial expectations with supply execution and inventory investment. This practitioner working paper introduces the fundamentals of demand planning (also referred to as merchandise planning or operational forecasting) and explains how planning teams translate sales expectations into purchase budgets and unit demand. The paper contrasts top-down and bottom-up forecasting methodologies and discusses how the choice of approach depends on the availability and reliability of historical sell-out and sell-in data. Key planning elements are reviewed, including product mix, markdown assumptions, leftover planning, cancellations and delays, returns in online channels, assortment requirements, rate-of-sale estimation, initial allocation, sizing, and carry-over management. The paper concludes by outlining the reconciliation process required when bottom-up forecasts and top-down targets diverge, and highlights the role of managerial judgment, iteration, and analytics in improving forecast quality. This paper is written from a practitioner perspective and is intended for executives, graduate students, and professionals interested in demand planning, merchandising, and inventory management.