For most inventory-based businesses, demand naturally fluctuates throughout the year. Some businesses see primarily seasonal sales, with the bulk of their sales for the year taking place during specific times. Others may notice that they have peaks and valleys that occur at predictable rates. Still others may notice that the stock they sell changes dramatically between one season and the next. Their overall transaction values may not change substantially, but they may sell very different inventory.
Keeping stock moving smoothly through your business is a critical part of ensuring customer satisfaction and raising your profits. Effective seasonal demand forecasting can help you prepare.
Seasonal demand forecasting is the process by which business owners and managers determine the ebb and flow of sales throughout the year or over the course of different seasons.
Customers’ needs can change dramatically between seasons. Chances are, you don’t see a high volume of swimsuit sales in the middle of the winter. Likewise, holiday decorations may not sell as well over the summer months. Some changes in demand may be more subtle: for example, an office supply store might have a large uptick in school supply sales and technology sales at the beginning of the school year, but they might also note an uptick in sales around the time local schools have their final exams scheduled. Forecasting the seasonal changes in demand can make a huge difference in your stock levels—and with accurate demand forecasting, you can often better provide for your customers’ needs, which can help improve your sales numbers.
Seasonal demand forecasting is an ongoing process. Your needs may change every year based on the most popular products and even which products consumers need on a given year. However, there are several strategies you can use to improve your seasonal demand forecasting.
The seasonal stock that you have on hand may vary dramatically depending on your business. However, there are several key trends to keep in mind. For example:
Pay careful attention to your seasonal stock and which items customers are most likely to need at different times of the year. Your seasonal stock will depend on your business’s unique inventory.
As you prepare to accurately forecast seasonal demand , make sure you have a solid understanding of customers’ seasons. When do you need to stock those vital items? Holiday shoppers in 2021, for example, started picking up Christmas gifts before the end of October. Around 59% of back-to-school spending may take place before the end of July, even in areas where students may not return to school until mid to late August.
Get to know customers’ seasons and how they have changed. Pandemic-related changes have caused many people to start shopping earlier to avoid supply chain problems and shortages that could prevent them from getting their critical items. Furthermore, many people naturally start preparing and shopping early for major seasons and changes. Knowing your customers’ seasons is a critical part of seasonal demand forecasting.
As you forecast seasonal demand and the needs of your customers, it’s critical that you look at your own supply chain. In many cases, you may need to make allowances for slower-than-usual shipping times or increased strain shipping experts, which may result in shortages. By paying careful attention to supply chain challenges, you can better prepare for the needs of your customers and ensure that you’re ready for coming increases in sales.
A look at historic seasonal demand can help give you a reasonable idea of what sales may look like in the current year, but it can’t tell the whole story. Current trends, shortages, and consumer needs can have a heavy impact on spending and the inventory you may need to have on hand. For example, technology sales went up during pandemic years, catching many retailers by surprise. Parents and workers alike needed the means to connect virtually, and many households invested in the technology to make that easier. Fashion sales also changed dramatically during stay-at-home orders, when more people turned to comfortable clothes and athletic wear instead of the usual office fashions.
By including information about current trends in your seasonal demand forecasting, you can get a better idea of what sales will likely look like in the coming season, allowing you to prepare your inventory more effectively.
Where possible, you need an automated process for your seasonal demand forecasting. You need software that will look at current trends and demands, historic seasonal changes, and other information about your overall sales and incorporate that information into a comprehensive look at what your seasonal needs will most likely look like in the coming year. By automating the process, you take a lot of the guesswork out of your seasonal inventory needs. Your platform can tell you what you need, when you need to order, and when you may need to adjust your plans to supply chain challenges or find a new source for some of the raw materials you need. Automating the process will also ensure that you receive critical reminders when you need to order seasonal items—a process that, this year, may need to take place earlier than usual.
Are you looking for a strategy that can help you improve your seasonal demand forecasting? StockIQ can help. Contact us today to learn more about our demand forecasting and inventory analytics tools and how they can help you manage the changing seasonal needs of your business.