How To Manage Retail Seasonality

For retailers whose businesses are subject to seasonal fluctuations, the challenge of managing inventory levels is magnified. Occasional variances in sales levels require that inventory levels anticipate both the occasional tops in sales just as the occasional ebbs.

The best approach to deal with these seasonal fluctuations, and maintain positive cash flows throughout the year, is to develop detailed sales and inventory plans before the season starts, use those designs to control your product buys, and as benchmarks in-season to direct your progress.

Arranging requires some investment, time you may not think you have, but invariably those independent retailers that set aside the effort to carefully plan their sales and inventory are unquestionably more productive than those that don’t.

Before you start the arranging process, you will need to know what you’ve sold in the past, and how much inventory you had on-hand to generate those sales. While viable arranging goes a long ways past just what you did a year ago, this information is an important reference point. You will need to extract that data from your POS system, by category and month. Unfortunately, many POS systems don’t keep up a past filled with month to month inventory levels, so all you may be able to extract is sales data.

The arranging cycle starts with building a sales plan. For free retailers, most sales plans are broken out by category and month (despite the fact that sometimes, especially highly seasonal businesses or categories, it may be more fitting to plan sales constantly). The question to ask is a very basic one: “What is the most likely level of sales from stock (excluding special orders) by month (or week) Note that the inquiry is what the most probable degree of sales is, not what’s the most you might sell. It’s anything but difficult to get in a tough situation by arranging what you may have the option to sell, which has a relatively low probability of occurring, rather than planning for the most likely level of sales, which has the highest probability of occurring.

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