Forecast accuracy is a working-capital lever

Retailers tend to file demand forecasting under analytics. It belongs under finance. Every point of forecast error is capital tied up in the wrong stock, in the wrong store, at the wrong time.

The mechanism is simple. Over-forecast and you fund inventory that sits; under-forecast and you stock out and lose the sale entirely. Both are expensive, and a single blunt safety-stock number applied across every SKU and location guarantees you are doing both at once somewhere in the network.

Tightening forecast error at the store-SKU level — using time-series models that account for seasonality, promotions, and local patterns — lets you hold less stock for the same service level. That difference is working capital you get back. For a mid-market retailer, trimming a few points of error across the catalogue freed up a meaningful chunk of inventory without hurting availability.

The point is not the model. It is reframing forecasting as a balance-sheet decision, then giving merchandising and finance the same numbers to act on.