Sometimes retail appears to be sailing from one seasonal storm to another: different holidays, seasons and special events come and go. Alertness and constant adjustment appear to be must-haves in order to succeed. For many retailers, Christmas is undoubtedly the most important season, as it can make or break the entire year’s bottom line.
The challenges of Christmas vary from sector to sector. Specialty retailers often have long lead times, which makes predicting demand early and accurately imperative. For grocers, capacity planning and quick reaction is key. No matter what your sector, there’s a secret lesson to learn for staying afloat during the rush and making the most out of the handsome possibilities Christmas holds for your business.
Here’s the big secret: think of Christmas as a process, not an event. This process can roughly be broken into three phases: The lead-up, the season itself, and post-season, when the gifts have been opened.
The Lead-up to Christmas
As you know, Christmas is a great opportunity if you plan ahead. The planning phase is also where most of the disasters are averted.
Christmas tends to level the playing field between sectors that have long and short lead times – during the holidays, demand for goods is so great that no matter what the typical lead time, pre-orders have to be made early to enable suppliers to cope. This requires accurate day-store-item levels forecasts early on, so using a good forecasting system where you can combine intelligence from earlier Christmases, current sales rates, and market knowledge from the planners often proves valuable.
Christmas tends to level the playing field between sectors that have long and short lead times.
In addition to ordering the bulk of your goods from low cost suppliers, find alternative suppliers locally to prepare for unexpected demand. Local suppliers enable you to stock up quickly on items that fly off your shelves. Whereas the price per item might be higher, decreasing and dispersing order sizes allows you to minimize after-Christmas dead stock. It’s also good to have some stock at your distribution centre – this enables you to get goods to different stores quickly.
So This Is Christmas…
The crowds are gathering and the queues lengthening. A slight sense of something that might be panic is creeping in, and it seems like there’s still time to adjust. And there is!
The best way to minimize stressful situations is to make your supply chain proactive. At the start of the season, there’s still time to replenish supplies or activate additional marketing.
The best way to minimize stressful situations is to make your supply chain proactive.
Take care that your exception management process runs smoothly. This calls for prioritisation – pick your most important fights and take care of them instead of trying to pay attention to every problem at once. Also, automate everything you can.
When Christmas Day gets closer, prepare to ramp down. This is a balancing act – trying to avoid excess stock while having enough goods to meet demand. This is made easier by taking care of responsiveness, as detailed above. A ramp-down can begin earlier than you might think: in some areas of retail it’s actually all right to run out of some lines by December 23rd or 24th.
Excess stock is practically impossible to avoid completely. The problem is best dealt with by smart discounting. It’s often better to offer a smaller discount early on, rather than huge blowouts at the last minute: Small discounts help drive up demand for the rest of the Christmas season.
Get Lean After the Christmas Meal
Okay, Christmas is a wrap! This also means you have a great deal of new information and data to digest and use to make your process even leaner for the next holiday season. And remember, the process applies not only for Christmas. All recurring events like Easter or Black Friday should be looked at in the same way. They are all a part of the constant planning process that needs to be taken care of, no matter the size or length of the event.
And remember, the process applies not only for Christmas. All recurring events like Easter or Black Friday should be looked at in the same way.
Study the problems that occurred during the season and identify their root causes. Make informed changes in your process, and remember to document them. Remember that analysis means nothing if it doesn’t inform your actions, so make sure you have a concrete plan for implementing your planned changes!
All in all, Christmas requires a lot of work, but with the vast business potential, it’s well worth the effort. Besides, by adopting a process approach, all the work you do can be used to improve your actions during the next season. If you’re in retail, smart planning and responsiveness goes a long way towards a very Merry Christmas!
Want more information? We’ve published a white paper on the Christmas supply chain. Check it out at: Managing the Christmas Supply Chain