Aug 26

How to Better Manage Your Seasonal Inventory

Manage your seasonal inventory strategically so you can maximize profit and decrease costs.

Seasonal Inventory refers to products or stock that are made, purchased from suppliers, and are stored by the business to serve a season/event-specific demand. This type of inventory is different from the regular products that are kept on hand and sold by the business all year round, and a business can carry both seasonal products and regular products at the same time.

Last year alone, holiday shopping grew 32.2%, but 2020 posed new challenges for businesses as sales of B2B and traditional retail decreased while e-commerce sales increased. Businesses have had to pivot and adapt to cater to the diversifying needs and preferences of consumers. Now more than ever, businesses must work smart, not just hard, to keep thriving under fast-changing circumstances.

What Warrants Seasonal Inventory?

The “season” in seasonal inventory doesn’t just pertain to holidays. Various time-bound or time-influenced factors result in seasonal inventory, such as:

  • Weather or Climate – The availability of some products, whether production or logistics-related, may be dependent on weather conditions. You’ll often find that some fruits and vegetables are sold cheaper or in better quality at certain periods because they are in season. 
  • Culture-Related Holidays and Traditions – This is what we typically associate seasonal inventory with. It refers to products or services that skyrocket due to certain holidays or events, like how candy and costumes are in demand during Halloween or turkeys are a must-have during Thanksgiving.
  • Cyclical Population Shifts – Some seasons cause large groups to move to a certain area, which requires local businesses to prepare for the mass influx of people. For example, restaurants around popular beaches may expect to have more customers during summer vacation and spring break. They may also expect to offer more cold drinks or desserts on their menu during warmer seasons versus colder seasons.
  • Payday – Most employers issue paychecks around the same time, and consumers tend to spend more on or after a payday. Businesses can leverage this period to sell more to customers.

How to Manage Seasonal Inventory Effectively

Now that you have more context, let’s talk about how your business can better manage seasonal inventory.

two men managing inventory

1. Data Tracking and Analysis

It’s wise to keep a close eye on your inventory levels all year long. And this diligence will prove particularly useful when different seasons come around. Because seasonal inventory caters to season-specific or time-bound demand, you want to keep just enough on hand to meet consumer demands but not so much that you’ll have a ton of leftovers at the end of the season. 

Don’t fear low inventory levels, especially if your products can be replenished quickly. Monitor your daily sales and inventory levels and keep a lookout for sudden dips. This will also help you pinpoint your profitable regulars that you must continue selling along with your seasonal products, as these are items your loyal customers have come to expect from you. 

Manual inventory tracking can be burdensome, so automation is your best friend. A trusty POS system can automatically log every sale as it happens and update the inventory records in real-time, so it’s easy to view your stock levels daily. By doing this, you can see what’s selling and what’s stagnating, which helps you make smarter choices about what’s worth restocking or not. A good point of sale system can also let you set threshold levels and will automatically remind you when it’s time to reorder a certain product. 

2. Forecasting

No matter what seasons your business caters to – whether you’re a fashion retailer planning for fall/winter seasons or a restaurant tailoring your menu to include seasonal produce – you can expect the seasons to recur every year. Research and information are key in forecasting and preparing for the upcoming seasonal demand you must meet.

Historical data can provide insights on sales levels and sales trends from the previous year, so you can gauge your minimum inventory levels and avoid overstocking. A point-of-sale system keeps historical information on various business metrics, so you can compare your performance, glean insights, and optimize your operations. Researching emerging trends and economic data can also help you understand what consumers currently want and how much they can spend.

Forecasting also entails plotting timelines and planning accordingly. Understand how long your season will be, as well as the expected peaks and lows, and factor in the time it will take to replenish stock. For shorter seasons, you may consider just getting a large load of stock once. For longer seasons, you might want to pace the replenishment depending on consumer demand.

3. Get Creative About Inventory Disposal

As consumer spending tends to increase during holidays, you can leverage this willingness to shell out cash to cut loose old inventory. If some items pair well together, you may offer a regular product as a complimentary item to the seasonal product. For example, if you have a dessert item on your menu that patrons rarely order, you may offer it as a freebie in a special Valentine’s Day promo. You may also offer regular products at a discounted price upon purchase of a seasonal item. This will make consumers feel that they are getting a good deal.

Historically, businesses offer large discounts after the holidays to dispose of seasonal inventory, particularly retail stores. Many consumers know this and deliberately wait for this period, so prepare for this influx of customers and plan your discount levels well.

sale

4. Streamline Business Reports

Seasonal inventory management can be tricky since it runs parallel to the inventory tracking for your regular items. To understand the sales performance of your seasonal products, consider creating tailored reports for each season or pinpointing your seasonal items to be tracked separately. Doing this will give you the big picture perspective of how your business performs season versus season and season versus regular period.

A good POS system should provide robust back-office reporting and allow integration with third-party reporting software. Because a point of sale system tracks everything that goes in and out, maximizing the data into actionable insights can help you make smarter decisions for your business. 

For business solutions and POS needs, talk to True POS. Get a free quote today!

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