Seasonal Products | 4 mins read

5 Top Tips for Forecasting & Managing Seasonal Products

5 top tips for forecasting managing seasonal products
Jin Hyun

By Jin Hyun

Depending on the time of year, some products may become more or less in demand, this fluctuation is referred to as seasonality. This phenomenon can cause dramatic peaks and dips in demand for certain items and pose a great challenge for inventory control.

Seasonal products must be managed carefully to consider possible events or changes in trends that may affect its popularity. While this can appear unpredictable, businesses can navigate through these shifts by utilizing accurate forecasts to fine-tune their seasonal demand planning.

The Challenges of Seasonal Inventory Control

A surge in demand for seasonal products presents businesses with a great opportunity for increased profitability. However, this sudden surge in demand is inevitably accompanied by an equally drastic reduction in popularity not too long afterward. From a supply chain standpoint, this can be very difficult to manage and control.

In order to take advantage of this phenomenon, businesses need to order and hold just enough inventory to meet the influx in demand without losing sales to stockouts. When they overestimate this demand, it can result in overstocking and therefore, increased inventory purchasing and holding costs. On the other hand, under ordering will lead to shortages and can affect customer satisfaction, as well as the business's reputation.

Additionally, ordering and planning for seasonal inventory will require increased ordering costs. When planning for seasonal items, businesses need to order this inventory well before their peak seasons. Meaning, they often have to order these items in bulk and account for these increased expenses until sales begin to increase.

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Types of Seasonal Products

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Generally speaking, seasonal products can be broken down into four specific categories-

  • Holidays - It is no surprise that the holiday season is a big category of seasonal inventory. For example, October brings about an increase in Halloween products, with many retail stores opening Halloween-themed aisles during this time. Similarly, Christmas, Easter, and Thanksgiving will bring an increased demand for products that are associated with their respective holidays.
  • Fashion - The fast fashion industry is constantly adapting to seasonal changes in clothing items. This can occur in relation to the changing weather and the different items of apparel necessary depending on the season. However, it can also be in relation to the ever-evolving fashion trends.
  • Recreation - Similarly seasonal leisure activities generate drastic increases in sales during different times throughout the year. For example, swimwear, sandals, sun-lotion, BBQ equipment, tents, and sports equipment are likely to become more popular during the summer. Whereas snow gear, shovels, and sleds will see a steep increase in sales during the winter months.
  • Back to School - With millions of children around the world heading back to school, August naturally brings a big increase in demand for school-related products. Items such as uniforms, books, school bags, and stationery will experience a dramatic surge in sales within this time period.

5 Tips for Managing Seasonal Products

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When it comes to managing seasonal inventory here are 5 helpful and easy tips to follow-

1. Categorize inventory stock
A helpful start would be to categorize inventory stock. Businesses can separate purely seasonal stock, items that only attract demand during their seasons such as Halloween decorations, and the perennial products, items that experience periods of increased demand but can be sold year-round, such as roses.

This is the first step to establishing proper inventory control to ensure businesses are not left with an excess of purely seasonal items.

2. Increase forecast accuracy
Forecasting demand is a big challenge in inventory control, especially when it comes to seasonal fluctuations. However businesses can closely analyze historical data, seasonal patterns, and variations to help identify any annually recurring trends in sales. This information can then be used to set minimum stock levels of various seasonal stock.

The most effective and least labor-intensive way to increase forecast accuracy is to utilize forecasting software. This will eliminate room for human errors by collecting data straight from the POS system and running various calculations in an instant.

3. Determine seasonal demand timelines
A key factor of preparing for seasonal demand is to identify the lengths of these peak seasons. Items with shorter peak seasons will need to be ordered in full in advance, while products with longer seasons will need to be restocked several times.

4. Find product lead times
Lead time refers to the average length of time it takes to receive a product from the supplier, from the ordering process to the final delivery. These lead times will determine purchasing decisions and the reorder point for seasonal inventory.

Generally, the longer the lead times, the sooner a business would have to order their seasonal products. Alternatively, shorter lead times would allow businesses to make purchasing decisions during sales seasons.

5. Remain flexible
Ultimately, businesses should continue to review the accuracy of their seasonal demand forecasts and make the appropriate adjustments to ensure the following years' projections are even more accurate.

In the case that certain seasonal stock fails to move as quickly as anticipated, businesses should consider offering discounts towards the end of the items peak seasons to prevent excess inventory or deadstock.

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