5 Tips for Managing Seasonality in Retail
Yearly and monthly trends are factors every retail owner and manager must consider. Grills trend in the summer, jackets in autumn, and toys in winter. It is important to understand and incorporate this information into your operations in order to be efficient and successful.
Try to Understand Your Market
As you know, the particular segment your business operates within will play a large part in determining the impact of seasonality.
Try to track your own sales. Keep a spreadsheet running with a program like Microsoft Excel to record your weekly or monthly sales figures. If your business sells a variety of products or services, then you may want to consider recording them separately. You can use Excel to create a simple graph to see how your business performs at various times of the year. The longer your business has been operating, the more data you will have to analyze. If you haven't been tracking this information, or if you are operating a fairly new business, then be sure to start recording this information as soon as possible.
While every business owner should look into market research, it is especially useful for new businesses. They won't have the data from their own sales figures to plan around, so reading into the general market will be their only option. Learning more is always valuable in any context.
Take Care of the Relationships Between You and Your Workers
The seasonality of businesses does not only affect business owners. Employees often base their lives around their jobs, and they need to be in the loop as much as possible.
If you hire seasonal employees, make sure they understand that this is only a temporary position before you hire them. You may tell them that you could have positions available for permanent workers at the end of the season, but don't be misleading.
Also, inform your permanent workers of the situation. If you need them to work more hours during certain parts of the year, let them know ahead of time. Similarly, if you hire them in season when the business' activity is peaking, and you promise them a full time set of hours, let them know whether or not that will persist in the off-season.
If these steps aren't taken, you will end up with disgruntled workers even if you didn't intend to affect them negatively. They may quit unexpectedly, leave poor reviews online to sway potential employees from applying, and their quality of work may drop if not treated well. It is generally unethical to treat employees this way. You will find employees regardless of the schedule or seasonality of your positions. College and high school students are always looking for summer or winter jobs. They are usually fine with working full-time in season and part-time in the off season. There are always people looking for work, so you can keep them happy and avoid potential negative side-effects.
Plan for the Seasons
The information you gather will be crucial when it comes time to plan for the low and high seasons. You should ideally be prepared for any seasonality six months to a year in advance. Understanding your market and your specific sales figures will be crucial to this.
Let's say you run a store that sells grills and related items useful in the summertime. You know that quality backyard grills will be in high demand during the summer and will fall off as the end of the year approaches. Look at market data and see how the sales of those items are expected to trend in the upcoming year. If possible, look at your sales numbers from previous years and use the data to estimate the sales you will have this summer. Also, make sure your market research is tailored to your region. Retailers in Vancouver will have different summertime needs to retailers in Florida. Use this information to ensure you have the right amount of inventory for each season.
In Season Adjustments
The real world does not always go as planned. Meteorologists may predict the temperatures in June to be warmer than in March, but the actual day-day temperatures will vary. The second week of June could be colder than the second week of March. Does this mean meteorologists are useless? No, it's just that no matter how competent they are at their job they aren't omniscient.
The same goes for planning a retail business. For example, a clothing retailer may expect swimsuits to peak in June and drop off significantly in August. However, if their swimsuit sales start to seriously decline in mid-July, a change of plans would be required. Instead of waiting until August to run clearance on swimsuits, the smarter option may be to start the sales earlier to avoid ending up with an abundance of inventory.
The principle on display is simple: be adaptable.
Following the previous example, pay attention the specific items within categories. If summer-time items are in season, your least desirable items will be hit the hardest when the season comes to a close. Be ready to mark-down those items earlier and by a larger margin.
Keep data for the current season as it is ongoing. Your plans may indicate a specific schedule of peak and trough sales. Graph your real-time data against the expected data and adjust accordingly. Watch the sales for each item and determine if any adjustments are necessary. It may peak late and decline late, peak early and decline early, or some other combination. Your plans will have you prepared, but you'll still be able to adjust accordingly.
Not every small business owner has a PhD in market research. While you should be as informed as possible, you probably have a lot on your hands. It is almost impossible to become an expert on the market while also running a business.
If your business is large enough, you may be able to hire an expert full time. They will already have expertise in your market. They can keep and run various analytics on your business and calculate the exact moves to make each part of the year.
Hiring a full-time marketing and advertising expert may be too much for some businesses. You can hire a consulting company who will look over your business and explain it in the context of the greater market at play.
Managing a retail business can be exciting, but it can also be incredibly stressful. The right amount of planning and flexibility can go a long way towards making your life less stressful and your business more prosperous.
About the writer: Annabelle Carter Short is an experienced writer, editor, proofreader, blogger, teacher and photographer. She likes to cook, sew, and she's very passionate about healthy food that tastes delicious. She runs a small home-based crafting/sewing business and is passionate about Etsy.
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