McKinsey & Company recently reported that retailers using AI-based assortment planning solutions have cut SKUs by 36% while lifting sales 1-2%, a leaner merchandising strategy driven by data science. Thanks to AI-driven inventory planning, machine learning and data science, smart retailers are able to better manage SKUs, grow sales and meet customer demands to enhance decisions.

Making The Data Work for Multi-Channel Fashion Merchandising

While algorithms and AI models are setting a new standard for data accuracy, the real success in fashion merchandising comes from combining creative expertise and industry insight with automation and AI insights. Retailers understand the nuances of their markets and customers and they are able to anticipate trends and adjust, to connect with shoppers wherever they are. AI enhances this art by analyzing data at scale and providing performance-based recommendations tailored to each SKU, store and channel.

By taking massive amounts of data in real-time and turning it into precise, actionable insights, AI systems are enabling retailers to make smarter, faster decisions at a granular level. Between dynamic open‑to‑buy decisions, allocation based on localized demand and real‑time decision-making, AI-powered inventory management is making the data work for multi-channel retailers through accurate demand forecasting. 

Best Practices: Blending Science and Art in Retail

7thonline has always reinforced the message that AI is a tool, not a replacement for retail expertise or the human eye. It’s the planner, the designer and the strategist who recognizes emerging trends and applies insight. The most successful retailers approach AI‑driven merchandising as a partnership between technology and people, seamlessly blending the art of merchandising and the science of data.

While algorithms excel at analyzing data and forecasting trends, it’s humans who interpret those insights through the lens of brand vision and creative intuition. AI analyzes customer behavior, regional preferences and past performance to recommend the most optimal product mix, while merchandisers apply their intuition to curate assortments that connect the brand with their shoppers. Merchants carry the brand’s DNA into every assortment decision, ensuring that what’s on the rack resonates not just with a data profile, but with the community it serves. Combining data-driven insights with human creativity, enables retailers to make smarter, faster product decisions. 

The retail industry, particularly in fashion, is driven by individuals with a deep passion for their craft. Many have spent their careers mastering how to anticipate what shoppers will want, before they even want them. Both a learned skill and a purposeful instinct, selecting the right styles, colors and sizes for the right stores at the right time, is an art baked into the shopping experience. The strategic blend of timing, positions and sensory elements, bring a brand’s vision to life and AI helps to ensure that experience will resonate with the target audience.

Use Case Scenarios

In today’s dynamic landscape, blending the art and science of retail can look different in practice. It all depends on your own business needs. The following use cases illustrate how retailers can harmonize creative judgment with advanced technology:

Assortment Planning

Blending data and creative curation, AI-powered assortment planning ensures the product mix reflects both customer demand and brand identity. The data science behind AI systems analyzes the “what” (what product mix, what store, what channel) while merchants fine-tune the “why” using the extensive knowledge they’ve gained on which trends are still in their early stages, compelling storytelling and how shoppers will react. 

Dynamic Replenishment

While predictive analytics and real-time sales data empower dynamic replenishment decisions, such as reorders, these systems only account for seasonality, past trends and product lifecycle stages. It’s up to the merchants to detect shifts before algorithms, such as weather changes, large marketing pushes, influencer buzz and more. Using detailed insights for efficiency and precision, retailers are able to make context-aware decisions, at scale, with specificity, that react to the nuances of real-world events beyond historical data.

Trend Forecasting

AI systems can read the signals, but merchants can read between the lines. With AI systems picking up massive amounts of data from various sources, retailers are able to see early signals on trending products, long before the results hit their sales numbers by bringing breadth and speed to trend detection. Experienced merchants are the ones that know how to interpret these signals through the lens of their brand and customer, to turn the signals into differentiated product decisions. 

In each case, human expertise turns AI’s recommendations into market‑ready decisions that impact the bottom line.

Read more in the September 2025 issue of Fashion Mannuscript here: https://issuu.com/mannpublicationsmagazines/docs/fm_september_2025_full?fr=sYTRjMzg2MDI5NTU

To learn more about enhancing the art of merchandising through data science and AI-powered solutions, email us at info@7thonline.com or book a demo with the team.

In the retail industry, AI is now powering decisions once driven solely by instinct. Research Gate recently reported that AI-based assortment planning has helped some retailers cut SKUs by 22% while increasing sales by 15%. Through predictive AI, machine learning and real-time data processing, retailers are able to forecast demand with unprecedented accuracy, optimize product assortments and respond instantly to real-time market signals—managing inventory with surgical precision and growing sales by anticipating customer demand at scale.

The Power of AI, Turning Data Into Intelligence

AI’s ability to synthesize vast, multi-source data in real time to generate granular, predictive insights exceeds human capacity, transforming how decisions are made across complex environments and millions of data points.

Going beyond traditional number-crunching, AI-powered retail planning systems act as the engine behind data-driven merchandising strategies. They continuously synthesize inputs from sales history, online browsing patterns, social media sentiment and regional buying behaviors, creating hyper-granular recommendations tailored to every SKU, store and channel. These systems report what’s happening and predict what’s likely to happen next, enabling planners to adjust and optimize in real time, matching localized demand and responding to sudden market opportunities or disruptions.

When this analytical precision is paired with the nuanced judgment of experienced merchandisers, the powerful synergy ensures that strategy is both analytically sound and emotionally resonant, aligning commercial performance with authentic brand storytelling. AI optimizes retail operations and elevates them. At 7thonline, the philosophy has always been clear: AI is a force multiplier for human expertise, not a replacement for it. We build AI to deliver the art of merchandising at scale. 

The Human + AI Model: Retail’s Competitive Edge

AI’s unmatched accuracy and speed give retailers a powerful decision-making engine, realized in lockstep with seasoned merchandising instinct. AI can identify the most statistically profitable product mix, but it takes human insight to interpret those findings through the lens of brand vision, trend trajectory and customer psychology. Together, they create a merchandising approach that is not only faster and more accurate, but also deeply attuned to the creative and emotional cues that drive fashion purchasing. From demand forecasting to in-season adjustments, AI is turning vast streams of raw data into actionable intelligence that directly improves both profitability and customer experience.

Algorithms excel at detecting patterns in customer behavior and past performance; human judgment applies brand DNA, storytelling and creative intuition to curate assortments that connect with shoppers on a deeper level. The planner who detects the start of a microtrend, the designer who senses a shift in aesthetic and the strategist who understands the subtleties of local customer behavior provide the interpretive lens that gives AI insights their commercial and emotional impact. 

In fashion merchandising, this blend of science and art is critical. Many merchandisers have honed their craft over decades, learning how to anticipate what shoppers will want before they know it themselves. This involves not just picking the right styles, colors and sizes, but timing them perfectly for the market and presenting them in ways that evoke desire; processes that would have taken an insurmountable amount of time are now instantaneous. By embedding AI into this process, retailers ensure that the brand’s vision is brought to life with precision while creating assortments that resonate not only with a demographic profile, but with the communities they serve. 

In practice, this human-AI partnership doesn’t follow a single formula. It adapts to each retailer’s goals, product categories and market dynamics. The most effective applications are those where AI’s scale and speed are paired with the merchandiser’s ability to recognize nuance and context that algorithms can’t fully capture. 

Retail Data Science: Blending AI Precision with Merchandising Intuition

The balance between human expertise and AI intelligence is most visible in three critical areas: assortment planning, dynamic replenishment and trend forecasting. Each demonstrates how technology and creativity converge to deliver sharper, more profitable decisions.

Assortment Planning

AI-powered assortment tools analyze SKU performance, customer demographics and emerging trend signals to recommend the most profitable product mix for each store or channel. Merchandisers then refine these recommendations, filtering them through brand identity and their understanding of customer sentiment to ensure the selection aligns with both commercial goals and the brand’s creative vision.

Dynamic Replenishment

Predictive analytics and real-time sales monitoring allow retailers to make replenishment decisions based on precise demand forecasts. Merchandisers add value by incorporating context outside of historical data including sudden weather shifts, influencer-driven demand spikes or marketing campaigns, making allocation decisions that respond to both the numbers and the moment.

Trend Forecasting

AI scans massive volumes of data from social media, search trends and global sales to detect early signals of what’s gaining traction. Merchandisers interpret these patterns through the brand’s unique perspective, deciding which trends to lean into, adapt or pass on entirely, ensuring that what makes it to market is both timely and authentic.

Across each of these use cases, AI delivers the analytical horsepower, and human expertise ensures those insights are translated into actions that not only improve margins but also strengthen the emotional connection between brand and customer.

AI is a necessity in its ability to derive detailed, data-rich insights at both scale and depth that is fundamentally transforming how decisions are made. What once relied on gut instinct and reactive planning is now informed by predictive models, volumes of real-time data and adaptive machine learning algorithms that uncover patterns invisible to the human eye; AI enables retailers to operate with a level of precision, speed and contextual awareness that was previously unattainable. 

As retail continues to evolve, those who embrace this human-plus-AI model will unlock a new era of intelligence-driven merchandising—where data doesn’t just inform decisions, it transforms possibilities.

Read the original article here: https://aijourn.com/ai-powered-retail-merchandising-where-data-science-meets-human-creativity/

To learn more about how AI can help brands and retailers with their merchandising, book a demo or email us at info@7thonline.com.

AI is a tool, not a replacement. For the merchandising world, it is a science meant to enhance the art of brand vision and retail expertise. AI enables speed, scale and structure but it’s the human element that brings meaning to those insights. It’s the planner, the designer, the strategist who recognizes emerging trends—who considers vision, context and creativity. So let’s reframe the conversation: AI doesn’t replace planners. It enables them. The future belongs to those who are ready to use it.

Mastering the Art of Retail Merchandising: Where Strategy Meets Storytelling

Merchandising is more than product placement, it’s the art of telling a story that converts browsers into buyers and buyers into believers. It’s how brands connect with customers, influence decisions and ultimately drive revenue. 

Knowing what products your customers want (even before they do) is an art form; it’s about instinct and insight—a skill refined over time much like mastering color theory. Placing the finishing touches to a masterpiece, having the right style, color, size in the right place at the right time is akin to shading and highlighting. It’s the strategic positioning of products, the timing of launches, the use of color and texture to bring the big picture to life. 

Merchandising isn’t just about moving products. It’s about crafting experiences. And like all great art, it’s both intentional and intuitive.

Automating the Science with an AI-Powered Merchandising System

The science behind merchandising is the data-backed analysis that guides decisions and provides details around your latest sales trends—all to say: Where’s the demand?

Is butter yellow still the color of the summer? How is ozempic impacting size profiles? Are skinny jeans back (with a vengeance)? What’s the lore around the latest -core: mermaidcore, balletcore, cottagecore?

AI comes in to enhance the art by analyzing data at scale, at a granular level, and improving operational efficiencies through automation.

With an AI-powered system catering to merchandising challenges, retailers are able to streamline data analysis, improve forecasting accuracy, minimize inventory risk and sharpen planning processes. AI systems digest massive amounts of data quickly and surface insights for an educated decision; it becomes a force multiplier for merchandising teams to make decisions that align with consumer preferences and drive profitability.

Retail Reimagined: Balancing Passion and Precision

The real power comes when AI and people work together. At its core, merchandising blends creativity with data. People provide intuition, direction and inspiration. AI aligns teams, breaks down patterns and identifies opportunities/risks.

A demand-led, data-backed approach enables businesses to stay agile, plan with confidence and protect their margins. With AI-powered retail planning software, retailers can seamlessly balance analytics with merchant intuition to deliver the right product mix—down to style, color, size.

To learn more about how your team can use AI to enhance the art of merchandising, email us at info@7thonline.com or book a demo with our team.

August 1st, 2025: Liberation Day part 2. With new tariff headlines (and rising consumer fears on what this means for their discretionary income), making smart production decisions that align supply with demand is imperative for retail brands to protect their margins. But between new rates and pushed implementation dates, uncertainty won’t subside until the ink dries. AI-powered supply chain forecasting software that integrates supply and demand data can empower retailers to plan ahead and make decisions that improve the bottom line.

Supply Side: Tariffs, Risks and Disruptions

10%. 20%. 30%. Tariff pricing is continuing to fluctuate and markets are reacting (albeit not as sharply as on the first Liberation Day). With varying degrees of diversification and globalization, brands will feel the effects of additional tariffs differently.

Regardless, most brands have begun implementing a variety of mitigation strategies including vendor negotiation and stockpiling products. According to a recent 7thonline survey, the most common move is likely to be price hikes—35% of retail leaders surveyed claimed price adjustments as their first response to new tariffs. Budget-friendly brands such as Shein and Temu have already increased their prices as they have lower margins than others. While others such as Gap and Urban Outfitters are choosing to absorb the additional costs, and are using this as an opportunity to obtain more market share. Some brands have opted for a wait-and-see approach, not allowing the headline-driven fears to falter their strategy.

Our survey revealed that over 20% of retail executives are not confident in their supply chain’s ability to manage disruptions, aiming to improve flexibility and resilience through infrastructure changes. The most common actions? Reducing overall inventory levels, diversifying suppliers and shifting to just-in-time inventory models. 

Demand Side: Capturing Trends in Consumer Behavior and Fears

Recent retail sales data revealed slower demand in the American market, with May seeing the biggest drop. However, economists think the worst is yet to come. Our survey revealed declining spending remains the top concern for this year with 39% of retailers already seeing lower demand in the past year. 

With a weak sentiment index, smarter assortment planning is critical to ensure each SKU earns its place on the shelf—especially as tariffs eat away at margins.

A demand-driven, data-informed approach empowers businesses to stay agile, plan accurately and protect margins. Assortment planning—part art, part science—not only anticipates relevant trends but also leverages data to analyze and forecast demand. With AI-powered retail planning software, retailers can seamlessly blend analytics with merchant intuition and creativity to engage shoppers and deliver what they truly want—down to style, color, size.

Getting the right products to shoppers, wherever and whenever they’re looking, is essential in ensuring shoppers keep shopping with your brand. Using AI, you can understand consumer behavior and maximize inventory productivity based on the item’s propensity to sell across channels.

Aligning Supply and Demand: Designer Changes Tailored to Shoppers

Business of Fashion states: Suppliers could start getting pickier about what products they’ll produce, and brands on what they’ll make, simplifying design components or opting only for higher margin products. Hardware store Home Depot, for example, warned it may stop selling some products if increased costs make them unprofitable to sell.

“We need to have certainty. Companies can’t make decisions on investment and shifting supply chains and so on with the rates constantly changing. And as it starts hitting demand it’s going to be really important for the economy that we get clarity on it so that supply and demand can normalize.”  — Aneesha Sherman, Bernstein US apparel and retail analyst. 

While the delayed go-to-effect date might have softened the blow for holiday planning—a crucial period for retailers—shopping behavior and appetite for the rest of the year is still up in the air; leaving retailers confused and screaming for certainty. 

To learn more about how AI can help brands and retailers stay ahead of consumers, book a demo or email us at info@7thonline.com. 

“Sorry, we don’t have any more in that size.”

Out-of-stock sizes rank as the top complaint among shoppers. Inaccurate stock purchasing across sizes is estimated to result in profit loss of up to 20% on average a month. In today’s retail climate, precision is everything. With shifting consumer preferences and compressed product lifecycles, the margin for error has never been smaller. One area where we consistently see brands leaving revenue on the table? Size allocation.

The Power of Localized Size Profiles

Too often, size profiles are applied broadly across regions—or worse, chain-wide—without accounting for localized demand signals. A best-selling medium in one district could be deadstock in another. Getting the right products in the right size, to the right store, at the right time is no longer optional—it’s essential.

Localized size profiles enable brands to fine-tune allocations down to the store or region level based on actual demand, not assumptions. But creating these profiles manually is time-consuming, and static models quickly fall out of sync with current selling trends.

That’s where AI steps in.

AI + Real-Time Data = Smart Allocation and Assortment Planning Software

Retailers are increasingly turning to AI tools to overcome challenges in balancing demand, availability and profitability. AI enables a more agile, responsive approach to assortment planning through granular insights on real-time data. Risk is reduced as production decisions are informed by what actually sells, cutting down on waste and markdowns.

Leverage advanced AI and machine learning models to analyze real-time POS data, identify emerging demand drivers and detect shifting size curves as they happen. This means brands can automatically adjust allocations based on what’s actually selling—down to the store level.

Our AI models factor in:

• Local climate and demographics
• Historical sell-through performance
• Category-level trends and seasonality

The result? More accurate demand forecasts, optimized size runs and fewer markdowns.

The Bottom Line

Localized size profiles powered by AI aren’t just a nice-to-have—they’re a competitive advantage. With today’s tools, retailers can stop relying on intuition and start making data-backed allocation decisions that drive full-price sell-through, reduce stockouts and increase margins.

Are you ready to turn your size profile strategy into a growth driver? Talk to the team at info@7thonline.com or book a demo. 

According to a recent survey conducted by 7thonline, 34% of retail leaders are concerned about declining consumer spending for this year—and this fear isn’t unfounded. May’s retail sales data was released this week, declining more than expected with the biggest drop in four months. However, apparel sales tell a different story. 

Excluding automobiles, gasoline, building materials and food services, May’s “core” retail sales increased .4%, after an upwardly revised .1% fall in April, suggesting a modest pick up in consumer spending this quarter; clothing sales rose by 10bps between April and May. However, downside risks to consumer spending are rising: slower labor market, student loan repayments resuming, tariff-induced stock market volatility, etc. While tariffs have had a clearer impact on large-ticket items, markets are signaling a slowdown for the second half of the year as tariffs begin to weigh on disposable incomes, according to Michael Pearce, deputy chief economist at Oxford Economics. 

7thonline’s survey of 100+ retail executives revealed that 73% of leaders are expressing concern over rising tariffs over the next year, with over 1 in 3 confessing their first response to new tariffs would be to adjust product pricing. Some retailers have been transparent about their plans to hike prices but others have not yet disclosed their strategies. 

“Past experience suggests the biggest price rises will come in July, though the full impact of the tariffs likely will emerge across the whole of the remainder of the year,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics.

Despite distress around consumer spending, price adjustment is the go-to move due to low margins—over 75% of retailers said that they would be unable to absorb more than a 25% increase in tariff costs. 7thonline CEO, Max Ma, shared with Sourcing Journal that because margins are slim, navigating spending discretion amid increased tariffs is especially challenging but “many retailers…are pressuring their suppliers to lower prices, so they’re trying to do it on both sides.”

Here are five more strategies retailers and wholesalers can adopt to offset the cost of tariffs: https://www.7thonline.com/post/five-tariff-strategies-for-retail

While tariff news and fears may have come off their peak, the effects are still yet to be fully seen. To learn more about how your team can use AI to navigate shifting consumer demand, email us at info@7thonline.com or book a demo with our team.