The holiday season.
It’s a time for rest. A time for family and friends. And a chance to enjoy some darn good food—and not feel guilty about it.
And for retailers, the holiday season can also be a great time for business. Despite a shaky economy due to issues such as inflation and rising interest rates, people are still eager to spend their hard-earned money in 2022 as evidenced by the $21 billion estimated to be spent during Black Friday and Cyber Monday in the United States.
But to take advantage of the spending spree that accompanies the holiday season, your business needs to be prepared. From forecasting demands to stocking up inventory and ensuring a great shopping experience for your customers, it’s important for retailers to start planning early. So how do you prepare your store for the holiday season? Check out our top seven tips below.
7 Ways To Prepare for the Holiday Season
1. Analyze Previous Year Trends
Preparing for this year starts with analyzing last year. Looking at previous year trends helps you refine your strategy for this year—and to set a benchmark of what to expect for this year in terms of revenue and expenses. So when analyzing results from previous years, ask yourself questions such as:
- How did your business perform over the holiday season in 2021?
- What lessons did you learn? What worked and what didn’t?
- What were your bestselling product lines?
- Where were your most effective marketing strategies and channels?
2. Stock Up Early
Once you’ve analyzed previous year trends—and taken into consideration current market conditions—it’s time to start preparing for this year. The first piece of advice is an obvious, but overlooked one: stock up! And do it early. You don’t want to miss out on revenue because you understocked popular items. And it’s important to start stocking up as soon as possible due to supply chain issues affecting many industries.
But how do you know how much to stock a given product? And, just as important, how much you can afford to stock?
Answering the first question is a bit more straightforward than the second. To accurately predict how much you expect to sell of a given product, you can look at historical sales figures. Have a product or services that tend to sell like hotcakes during the holiday season? Better stock up. A tool such as scenario planning can also help here—as you’ll be able to model out different business outcomes so you can be prepared no matter what the result is.
To understand how much your business can afford to stock, you’ll need to spend some time analyzing your cash flow. Overspending on stock can lead to issues such as a lack of cash flow, which may affect other areas of the business. At the same time, you don’t want to underspend on stocking up because you may end up running out of certain products and missing out on revenue. Cash flow tools can help ensure that however much you spend on stocking up your inventory, it won’t be detrimental to the business as a whole.
3. Analyze Your Profit Margins
Now that you’ve stocked up your inventory to prepare for the increased demand during the holiday season, it’s time to start thinking about your pricing strategy. This is when it’s important to ask and answer questions such as:
- Should I discount products? If so, by how much?
- Which products should be discounted?
- How will discounts affect projected sales and profit figures?
Remember, your bestselling products may not necessarily generate the most profit or give you the best return on investment. This is why it’s important to run a profitability analysis. Performing a profitability analysis will not only help you predict how your holiday sales will affect your business, but also assist in determining which products to discount and by how much.
It’s also a good idea (at any time of year, but especially prior to periods of heavy demand like the holiday season) to engage in revenue planning. Both profitability analysis and revenue planning will help you understand how your sales during the holiday season will affect your bottom line—and help you when answering the questions above.
Pro Tip: Read how you can future-proof your revenue planning during the recession.
4. Audit Your Inventory
When it comes to promoting products during the holiday season, many retailers focus on their most popular items. And while your most popular products may indeed bring in the bulk of your revenue, both throughout the year and during periods of increased spending such as t Black Friday and Cyber Monday, there is also another category of your products you should give extra attention to when consumers are ready to spend.
Can you guess?
Excess inventory. With consumers apt to spend, the holiday season is a perfect time to move your excess inventory through promotions and heavy discounts. This is why it’s critical to audit your inventory. Take a look at what products have not moved over the past few months and make sure to offer incentives for consumers to purchase them during the holiday season.
Moving your excess inventory will help your business by providing it with additional cash flow. Managing your cash flow is critical, especially during uncertain economic times like today when concerns around inflation and recession are causing issues for businesses around the world. And if you’re a brick-and-mortar store, or an online store with limited warehouse space, you’ll also get the added benefit of freeing up physical storage (allowing you to stock up even more on products you think are apt to sell).
5. Forecast Demand With Accuracy
Analyzing previous year’s trends, stocking up early, projecting your profit margins and performing an audit of your inventory are all going to help in ensuring that your business gets the most out of the holiday season. But all of these activities can be time consuming, especially if you’ve never done them before and don’t really know how to perform them.
Fortunately, we’ve created a free Excel template to assist you with all the above. Our inventory forecasting template is designed using best practices and can help you with:
- Projecting future inventory: Track inputs such as products used and products purchased over any given time period to understand past demand so that you can better predict future inventory demand.
- Predicting product demand: Calculate your ending inventory and get insights into demand by analyzing the number of pallet purchases you’ve made during the course of the year.
- Allocating resources: Our free template allows you to take into consideration the time lags between inventory purchases so that you can allocate resources across your organization effectively.
- Optimizing supply and demand: With optimized tables in our Excel template, you’ll be able to allocate pallets and track minimum orders more effectively.
Get started by downloading your free inventory forecasting Excel template today.
6. Remove Friction For Buyers
It’s the one thing buyers hate.
Think about it from a consumer’s standpoint. You’re all set to purchase a product or service and then something gets in the way. That little bit of friction leads to frustration. And frustration usually translates to a lot of lost sales for businesses. To help your store create a seamless, friction-free experience, here are a few best practices to incorporate:
- Ensure consistency during every interaction. According to a research report from Salesforce, 85% of shoppers expect consistency during every interaction. This doesn’t just mean ensuring that all of your customer-facing employees deliver the same great experience, it also means making sure that the inventory on your website and in store is updated in real time. If your website shows that inventory is available at a local store, make sure it actually is so that your customers aren’t wasting time commuting to the store when there isn’t actually any inventory.
- Provide generous return and exchange policies. “Final Sale” may as well translate to “Not going to buy this because if it doesn’t fit, I can’t return it”. Every store should be in the business of making their customers happy. And one easy way to provide peace of mind for your customers (and increase their chances of making a purchase) is to provide generous return and exchange policies.
- Give consumers flexibility. When purchasing a product online, give your shoppers flexibility as to whether they would like the product delivered, picked up in store or via contactless curbside pick up.
- Create an easy-to-use checkout experience. There’s nothing more frustrating than a checkout process that takes forever to complete. When building your online checkout form, try to include features such as autocompletion (for addresses) and autofill (for fields such as first name and last name) so that your customers spend as little time as possible filling out information. Also, ensure that it’s easy for the customer to view important information, such as the total cost (with taxes and shipping) and expected delivery, at a glance.
Customer service should be the backbone of your business. Quite simply, it is too difficult to compete on both the local and global stage in 2022 unless you’re providing your customer with excellent service during every interaction. Customer service is the easiest way to gain loyal, life-long consumers—and also the fastest way to ruin your brand’s image and ensure that your customers feel underappreciated. It all depends on how good or bad of an experience you provide.
Businesses shouldn’t need convincing that providing great customer service is good for their bottom line. But if your business does, consider just a few of these facts and learnings:
- 91% of consumers say good customer service makes them more likely to make another purchase.
- Excellent customer service can increase your customer lifetime value (CLV), which is one of the most important revenue metrics for businesses.
Preparing for the Holiday Season: Start Your Planning Early
In summary, by incorporating our seven best practices for preparing for the holiday season, your business will be ready to capitalize on the increase in consumer spending. Despite inflation and recession concerns, the record-breaking sales of Black Friday 2022 has shown us that shoppers still love to spend during this time of year. And you don’t want to miss out on this once-a-year opportunity to bolster your bottom line and clear out old inventory.
Whether you’re analyzing previous years trends and auditing your inventory or planning revenue and forecasting cash flow, the most important thing to remember is to start your planning process early. The early birds catches the worm after all (or in this case, the dollar bill). So incorporate the tips we’ve outlined in this article, download your free inventory forecasting Excel template and set up your business up for success during the holiday season.