Back to School. Halloween. Thanksgiving. December Holidays. Doesn’t it feel like once September hits, it’s just one holiday after another? For retail owners, this can be a hectic and stressful time. The September-December timeframe is a constant changing over of inventory. Not to mention there are larger crowds, a need for extra staff, the general strain of the holiday hustle and bustle, and the guessing game of how much extra inventory to carry to accommodate those crowds.
It is no secret that the retail world has changed a lot over the last 2 years with more people choosing to do their shopping online. This puts even more pressure on brick-and-mortar retail stores to compete. If retail owners want to compete with the Amazon’s of the world, they need to make sure they have customer experience and especially, the inventory to back it up. This is difficult enough with regular inventory. Throw seasonal products into the mix and competing is even more complicated.
Seasonal inventory is very specific, and customers are looking for certain items during those months, whether it’s sunscreen and sand toys or pumpkins and Christmas lights. If a customer goes into the store looking for a Super Mario backpack for back-to-school and it is not on the shelves, you’ve just lost that customer to online shopping or to a competitor. To avoid this situation, retail owners need to plan ahead. A study from the National Retail Federation shows that 55% of back-to-school and college shoppers say they plan their shopping around sale events such as July 4th and Labor Day. A RetailMeNot study found that 51% of consumers report shopping for themselves while picking up back-to-school items. This statistic gives retailers plenty of incentive to start or continue cross-promoting back-to-school offers with potential future promotions.
These findings show that retailers have an opportunity to boost their sales not just for the holidays, but in general, simply by keeping the right items in stock. However, seasonal inventory is extra challenging because a whole new set of products is introduced each season and it is difficult to predict how well they will sell and when they will sell. On top of that, the season is too short to do another buy after selling begins. Retailers run the risk of stocking too much inventory and then needing to create sales to move them. Retail owners want to make sure they are stocked with inventory, but also not overstocked which would leave them with pallets of items that won’t sell past the holiday season.
So, for the retail world, seasonal inventory allocation planning can present 3 major challenges: how much to buy, where to display it so that it sells, and how to get the profitability out of it that you need at the end of the season.
A tool like the 4R Allocation Planning solution helps retailers answer those questions. The tool gives retailers insights to help them make decisions by looking at the quantity they should be purchasing based on past seasonal buys, sell-through percentage, and forecast uncertainty. The Allocation Planning solution then handles the distribution of inventory to stores as the season progresses, by calculating the location, including e-commerce stores, that would yield the highest profit from an additional unit of inventory based on the point in the season, the store’s current inventory position, and sales velocity. Having visibility and insights into projected seasonal demand means a planner can make better decisions about inventory and placement. Having the right level of inventory, tracking the season’s progress and making adjustments accordingly means fewer markdowns of overstocked items and more profit at the end of the season!
The back-to-school and holiday season can be an exciting but stressful time, especially for retailers, but a tool like the 4R Allocation Planning solution helps retailers continue to give back to their customers. Need more help? Watch this On-Demand Webinar, “The Importance of Read & React in a Seasonal World” The webinar helps retailers reframe their approach to positioning seasonal inventory, maximizing revenue, and reducing stranded inventory and the need for markdowns.
For more information about 4R Allocation Planning solution, click here.