At the end of the calendar year, retailers face opportunities and challenges.
On the plus side, Insider Intelligence expects a 3.3% increase in holiday sales for the 2022 season, a growth of $1.262 trillion. Indeed, the holidays can bring in some of your biggest sales. That said, you could also miss a windfall without a solid holiday inventory preparation plan.
Here are 6 top tips to ensure your business is poised for success in the fourth quarter.
1. Organize Your Calendar for Your Inventory Preparation Plan
Your calendar will be packed with red-letter days in November and December, including:
- Black Friday
- Cyber Monday
- 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.
Some retail executives have started tackling their holiday inventory sales ordering plan during the spring, as holiday shopping now occurs throughout the second half of the year for many. Indeed, if you begin your holiday shopping in July with Amazon Prime Day, which brought in more than $11 billion in 2021, or start stocking up on next year’s gifts during after-Christmas sales, then you have an idea of this shift in spending behavior.
Your customers’ shopping timelines aren’t the only factor that impacts your inventory preparation plan, though. Remember your vendors’ or other suppliers’ schedules and warehouse schedules if you use them for storage or distribution. Be sure to note ordering and shipping deadlines for your initial holiday inventory purchases. Also, keep those dates in mind as you monitor any restocking you need throughout the season.
2. Conduct Demand Forecasting for Your Holiday Inventory List
As you put together your sales ordering plan, you must predict the necessary inventory quantities. 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 systems) to analyze your sales data from last year. Then 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 needs
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 substantial monetary investments. You’ll have to calculate extra costs for your holiday inventory plan, such as increasing packing and shipping costs. There are 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. Also, keep in mind other holiday events you could host for customers.
4. Keep an Eye on External Factors
Performance from previous years can help shape your current holiday inventory preparation plan. However, you should also factor in recent consumer trends and demands and the overall economic climate.
For example, compare the 2020 holiday shopping experience with the current year’s seasonal spending patterns, and you’ll notice key differences in consumer demand and purchasing trends.
For one, a top trend this year is the rise of mobile commerce, which accounted for $93 billion in 2021 U.S. holiday sales and is expected to see the most significant growth, according to a recent Inmobi report. Additionally, with the rise of inflation and supply-chain costs, shoppers will be looking for more deals and better value, which business owners must consider with their marketing efforts. In-person shopping is on the rise again too.
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 every day) 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 pressure on full-time employees while also helping you deliver a seamless shopping experience to your customers.
Keep in mind that it takes an average of 40 days to fill a retail position, according to talent company iCIMS, so consider starting your seasonal hiring in September.
Related: ‘Tis the Season for Holiday Hiring
6. Consider Financing for Your Holiday Inventory
If reviewing the costs of your holiday inventory list is causing concern, it might signal that you need some financial help for your business.
Many inventory financing options can help ease any financial burdens. For instance, during the holiday season, a lender might provide you with funding to purchase holiday inventory for your small to mid-sized business, and you’d use your sales revenue to pay back the money. With this type of financing, your holiday inventory serves as collateral.
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.
Another option is to look into seasonal business loans or financing. At Fast Capital 360, we offer seasonal loans with funding amounts up to $500,000. You can use the money for your inventory preparation plan, whether you need funds for marketing, employee wages or purchase orders. Interest rates start around 7%, and you could receive funding in as few as 24 hours.
Funding through online lenders makes it easy to purchase the inventory you need so you aren’t left struggling through the holidays.