Holiday
Even though the Christmas retail season seems like a distant thought, now is the time to start formulating your strategy. For many small retailers, the last few months of the year represent as much as a quarter of their annual sales and profit. As the next few months stroll by, November and December will loom ever larger, catching many independent merchants by surprise. The more planning you can do now, the better prepared you’ll be to take advantage of the coming opportunities.
When Christmas week hits, floor traffic, sales, and profits surge for small shop owners. To take full advantage of the increased business, independent retailers need to cement their plans long before November arrives. The challenge is to make sure you re positioned with the right products and the right inventory levels leading up to and through the holidays.
Planning correctly is more difficult than it seems. If you don’t identify the items that are most likely to generate sales, or you fail to stock your inventory with a sufficient supply, you ll sacrifice profits. On the other hand, if your forecasting leads you to order excess inventory, you’ll be stuck with overstock. That leads to markdowns after the holiday season, which decimates your profits.
The key to accurate holiday season forecasting is to look at your sales numbers starting in October.Identify the items that have gained popularity.Chances are, those are the products that will continue building momentum through the week of Christmas. Because your floor space is limited, you’ll want to build your inventory around your strongest sellers.
The chain stores and big box retailers enjoy economies of scale that all but guarantee they won’t run out of stock for their best selling items. Independent merchants normally don’t enjoy the same privilege. It is critical that you work with your vendors in advance to make sure your inventory is stocked with products that hold the greatest sales potential. You’ll need to work out order quantities and staggered delivery dates. If your vendors cannot supply what you need when you need it, you should begin looking for other sources.
Once you have agreed upon a delivery plan with your vendors, manage their progress carefully. During the year, you may be able to absorb a late delivery of a product. But, the holiday season is different. There is little room for error. If your vendors cannot deliver best selling items on time or cannot deliver the quantities agreed upon, your gross sales and net profits will take a hit. And during the busiest time of year for small retailers, that can have a major impact on your annual revenue.