I’m a big believer of trusting your own judgement and not getting too wrapped up in what everyone else is doing, but one of the biggest lessons I’ve learnt this year is sometimes it doesn't hurt to get prepared...just in case.
None of us foresaw COVID, and the impact it would have on panic buying. It feels like a lifetime ago that the shelves had no toilet roll and pasta. But you don’t have to be a retail expert to foresee an uplift in turkeys, alcohol, and mince pies this December. That said, almost all products will see a dramatic increase in sales leading up to Christmas - simply put, people buy more of (almost) everything.
The week leading up to Christmas is by far the biggest sales week of the year for almost all suppliers (unless you are in the Valentines or Easter egg business), but an often overlooked fact is that the week after Christmas normally sees the lowest sales of the year. Fresh suppliers, in particular, need to consider the impact on waste and replenishment orders that comes from people having plenty of food in, living off turkey sandwiches for 7 days, and shops that are barely open.
The graph below is a typical annual profile of weekly sales for a supplier that has ‘core grocery’ products (Jan-Dec):
Let’s start by making a key distinction - Christmas products vs seasonally affected products:
For Christmas-only products, there are limits to what you can do at this time of year, and seasonal product forecasts tend to be self-fulfilling i.e. with products sourced from the Far East, the volumes are typically agreed in March, shipped through the summer, into retailer depot in September, and on shelves at the start of October (it gives us all something to moan about on Facebook).
Everything that is shipped to the retailer gets sold (sometimes on markdown post-Christmas), and best sellers can run out early - unless you are Mystic Meg you will have either guessed at (sorry, ‘forecast’) too much volume, or too little. The balance for the supplier is to avoid missing sales by supplying too little versus getting hammered for markdown rebates in January when the excess stock is cleared at a fraction of the RRP.
All other products in store will be affected, to a greater or lesser degree, by the general uplift in sales; but why does this matter if stores order more every time they sell one? Three important reasons:
We would probably all recognise these typical Christmas shopper habits:
But of course, it’s a bit more complicated than that.
The big unknown this year, is can we even visit relatives during a 2nd lockdown. Will we all be having smaller than usual family gatherings and Christmas celebrations? If so, retailers should plan to sell a higher volume of baskets at a lower average value.
So what - what should you be doing now to get Christmas right?
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SKUtrak from Atheon Analytics provides a rich, visual, interactive analysis of trading performance to help consumer goods businesses build better, more valuable relationships with their retail customers.