The value of competitive information in forecasting FMCG retail product sales and the variable selection problem

Tao Huang, Robert Fildes and Didier Soopramanien

European Journal of Operational Research, 2014, vol. 237, issue 2, 738-748

Abstract: Sales forecasting at the UPC level is important for retailers to manage inventory. In this paper, we propose more effective methods to forecast retail UPC sales by incorporating competitive information including prices and promotions. The impact of these competitive marketing activities on the sales of the focal product has been extensively documented. However, competitive information has been surprisingly overlooked by previous studies in forecasting UPC sales, probably because of the problem of too many competitive explanatory variables. That is, each FMCG product category typically contains a large number of UPCs and is consequently associated with a large number of competitive explanatory variables. Under such a circumstance, time series models can easily become over-fitted and thus generate poor forecasting results.

Keywords: Forecasting; Business analytics; OR in marketing; Retailing; Promotions; Competitive information (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:237:y:2014:i:2:p:738-748

DOI: 10.1016/j.ejor.2014.02.022

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