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Retail Business Environment

Notes Managing Seasonal Sales: Building a Plan

To start, you need to develop a sales plan. For independent retailers, most sales plans are broken
out by category and month. In some cases, especially highly seasonal businesses or categories,
it may be more appropriate to plan sales by the week. “The question to ask is a very basic one:
‘What is the most likely level of sales from stock (excluding special orders) by month (or
week)?’” Hurlbut advises. Note that the question is what the most likely level of sales is, not
what’s the most you could possibly sell, he says. A business could easily get in trouble by
planning on the latter.
The following are considerations in developing your seasonal sales plan:
Review the prior year’s sales histories. Make allowances and adjustments for unusual events,
such as weather, out of stocks, one-time promotions, etc., Hurlbut says.
Factor in the appropriate increase or decrease. Based on your current sales trend and your
reading of the sales potential of the category for the upcoming season, you may forecast for
higher or lower seasonal sales. For larger categories, it may make sense to break the sales plan
down further, by sub-categories, styles or vendors.

Marketing plan. How are you going to reach potential customers? In addition to advertising and
direct mail, the Internet has opened up a wealth of new ways to reach customers. Hopefully, all
year long you have been collecting customer e-mails so that you have a manageable list of
contacts. Some companies are also toying with location-based advertising to reach customers
when they are near by a store and lure them in with promotions.
How to differentiate your business. One common issue for many independent retailers is how
to remain competitive with national chains in your market and other retailers, particularly if
they offer customers low prices. Butler suggests thinking along the lines of these questions:
“What makes my store unique and different to customers? What makes me distinctive? What do
I offer that they don’t?”
Hours and staffing levels. Determine whether you need to add seasonal staff to help make this
a banner year, or work with staff to stagger schedules so that your business can be open when
people are available to shop — which may involve more nights and weekends.

!
Caution “Many retailers are adjusting their hours. Maybe they close on Mondays or are
only open Monday afternoon,” Butler says. “For many retailers, Sunday has becomes the
second busiest day of the week.”

Managing Seasonal Sales: Buying Inventory

For many independent retailers, the largest asset on the balance sheet is inventory. “Inventory
is the ‘active’ asset, which generates the business’s sales and profits,” Hurlbut says. “But without
careful planning, inventory can easily get out of line, resulting in heavy markdowns due to
overstocks and, ultimately, serious cash flow problems.”

For retailers whose businesses are subject to seasonal fluctuations, the challenge of managing
inventory levels is magnified. Seasonal fluctuations in sales levels require that inventory levels
anticipate both the seasonal peaks in sales as well as the seasonal ebbs.

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