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6 Tips for Creating a Rock Solid Holiday Inventory Plan

By Tyler Sousa Reviewed By Mike Lucas
By Tyler Sousa
By Tyler Sousa Reviewed By Mike Lucas

As we come to the end of the calendar year, retailers face opportunities and challenges. The holiday season can bring in some of your biggest sales, but you could miss this windfall without a solid holiday inventory preparation plan.

Here are some tips—from keeping an eye on time and money to having an ordering plan that will keep your shelves stocked with the right amount of holiday inventory—to give you all of the information you’ll need to make sure your business is poised for success.

Office workers wearing Santa hats are having a casual meeting and are seated at a table

1. Organize Your Calendar for Your Inventory Preparation Plan

Your calendar will be  packed with red-letter days in November and December, including:

  • Thanksgiving
  • Black Friday
  • Cyber Monday
  • Hanukkah
  • Christmas Eve and Day
  • New Year’s Eve

However, even though the holidays and big shopping days are squeezed into a handful of weeks at the end of the year, your initial holiday inventory planning and purchasing should happen before Sept. 30—at the latest. In fact, some retail executives tackle their holiday inventory sales ordering plan during the spring. According to a study from Statista, more than one-third of U.S. consumers planned on starting their 2020 holiday shopping before the end of October, so if you can at least start stocking your shelves with holiday inventory by mid-fall, the better it can be for your bottom line.

As usual, with ordering procedures in retail, your customers’ shopping timelines aren’t the only factor that impacts your inventory preparation plan; also remember your vendors’ or other suppliers’ schedules, as well as warehouse schedules if you use them for storage or distribution. Be sure to include those parties’ deadlines for ordering and shipping as you mark your calendar for your initial holiday inventory orders and any restocking you’ll need during the season.

2. Conduct Demand Forecasting for Your Holiday Inventory List

As you put together your sales ordering plan, you must predict the inventory quantities you’ll need. You want to ensure your shelves remain well-stocked to meet increased customer demand; otherwise, you could lose business to competitors.

The best way to forecast inventory amounts for the months ahead is to consult your inventory management software (or other recordkeeping system) to analyze your sales data from last year. Calculate how much product was needed to fill orders, and  recall if any stockouts resulted in a loss of sales—or if any overstock could’ve been prevented.

When you accurately assess your anticipated demand, other factors in your holiday inventory plan will become clearer. Your demand forecast will affect how you manage other resources, including:

  • Holiday inventory budget
  • Marketing budget
  • Hiring additional staff

3. Map Out a Realistic Budget

Allocating enough funding to cover your holiday inventory list, among other holiday season expenses, is key to your success throughout the season.

As with your demand forecast, the best guide for this year’s budget is your previous year’s budget and final sales numbers for the holiday season. When you run through the numbers, make sure you adjust for any changes to your business, industry or the economic landscape that could impact you this year.

Remember, the holiday season is a great time to boost your revenues, but taking advantage of that can require bigger monetary investments from you. You’ll have to calculate extra costs for your holiday inventory plan, such as increasing packing and shipping costs due to the boom of holiday orders. There’s also the marketing costs for holiday promotions, additional staff and utility expenses if you have extended hours of operation at your brick-and-mortar store, as well as other holiday events you could host for customers.

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4. Keep an Eye on External Factors

While previous years’ performances can help shape your current holiday inventory preparation plan, you should also factor in recent consumer trends and demands, as well as the overall economic climate.

For example, the COVID-19 outbreak in the U.S. in 2020 is expected to impact the holiday shopping experience. CNBC reports that Deloitte estimates e-commerce sales will grow 25-35% in 2020 as more consumers, concerned about contracting the virus, avoid in-person shopping. With this in mind, retailers should invest in making sure their websites can handle increased traffic and that they have enough holiday inventory available to fill online orders.

The K-shaped economic recovery could also impact overall holiday spending, unless consumers who are still employed spend as much as they did in 2019, if not more, while workers hit by the economic downturn are expected to spend less in 2020.

After the economic collapse of 2008, ordering procedures in retail changed as the holiday season grew longer than it had in previous years. Retailers found it was easier to encourage spending that was spread over a few months rather than crammed into a handful of weeks. Budgets were tighter and U.S. consumers were more price-conscious, preferring to purchase items at discounts.

5. Hire Additional Help, If Needed

If you expect a surge in customer traffic and sales around the holidays, you’ll likely need a few extra staffers to help with your business’s increased orders and keep track of holiday (and everyday) inventory.

In-store pickup’s popularity has been on the rise, with many customers enjoying the convenience of online shopping but avoiding the wait time for shipping. Your seasonal workers could help you implement or expand an in-store or curbside pickup program, alleviating some of the pressure on full-time employees while also helping you deliver a seamless shopping experience to your customers.

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6. Consider Financing for Your Holiday Inventory

If reviewing the costs of your holiday inventory list are causing concern, it might be a sign that you need some financial help for your business.

There are many inventory financing options available that can help ease any financial burdens. With inventory financing for the holiday season, a lender provides funding to purchase holiday inventory for your small to mid-sized business, and use your sales revenue to pay back the money. Your holiday inventory also serves as collateral for the financing.

Inventory financing is a great option for small business owners who might not qualify for funding from a traditional lender or who don’t have collateral to secure a loan.

If your business is seasonal, you could look into obtaining seasonal business loans or financing. With funding amounts up to $500,000, you can use the money for your inventory preparation plan, whether you need the money for marketing, paying employees or your sales ordering plan. Interest rates start around 7%, and you can receive funding from your online lender in as little as 24 hours.

Funding through online lenders make it easy for you to purchase the supply you need when you need it, so you aren’t left struggling through the holidays.

Tyler Sousa
Tyler Sousa Contributing Writer at Fast Capital 360
Tyler Sousa is a content writer who specializes in business and finance writing. Born and raised in Central New Jersey, his journalism background and personable writing style make him a detail-oriented author as well as a great storyteller.
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