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How the Holidays Impact Retail Supply Chain

Retailers need to plan far in advance to prepare for the holiday supply chain.

By University Alliance
How the Holidays Impact Retail Supply Chain

The holiday retail season seems to begin earlier every year, with many stores displaying Christmas decorations and gifts long before Halloween. Retailers must be ready to serve two kinds of customers: those who like to shop early, and those who wait for the very last minute. How do they do it? With careful planning at every step of the supply chain.

Preparing to Introduce New Products

Consumers expect to have new, improved and trendy products during the holidays, and retailers do their best to comply. But knowing what products will sell well is a guessing game. In fact, a recent study by Terra Technology found that 82% of new products introduced to the market in the last five years have already been discontinued. To avoid missing the mark when introducing new products, retailers must do their homework and prepare their supply chains well in advance for sourcing, inventory and delivery.

Anticipating an Earlier Start

Consumers are used to seeing Back-to-School sales in July, followed by Halloween displays in August and Christmas decorations in September. Both in-store and online retailers know that if they want to capture the demand for these seasonal items, they must be on the shelves or ready to ship when consumers are ready to buy. This quick changeover between seasons makes promotions more challenging, and leaves retailers little time to collect and analyze data that can help them better plan efficient logistics. On the other hand, longer selling seasons can help with reverse logistics, because they give consumers more time to buy and return items earlier in the cycle.

Start Planning Far in Advance

Retailers typically have their holiday supply chain strategies in place at least six months in advance, which means starting the process as soon as the previous holidays are over. They also put contingency plans in place that are agile enough to react to severe weather conditions, product shortages and shipping delays. Powerful data gathering and analytics tools remove some of the guesswork in dealing with unpredictable situations, such as labor strikes by port workers or rerouted shipments.

Get Ready for More E-commerce Package Deliveries

Consumers have embraced e-commerce in a big way, which can really strain shipping systems during the holidays – particularly when attempting to meet late shoppers’ expectations for timely deliveries. Trouble-free e-commerce fulfillment and delivery is essential to both strong sales and customer loyalty. A few ways retailers deal with the pressure at various points of the supply chain include increasing staff with seasonal employees, adding more delivery hubs and beefing up data process systems.

Mining the Data

Retailers are increasingly relying on data to make sales and marketing decisions, as well as when planning supply chain activities. They analyze sales of new products and traditional best sellers by channel and track industry insights to make informed inventory decisions. They also invest in point-of-sale data collection and cloud computing to leverage real-time information for inventory control and faster restocking of best sellers.

Taking the Next Step

Once the holiday season is over, retailers are armed with additional data on consumer preferences, popular items, delivery successes and failures, product shortages and other important factors that can mean the difference between a year that ends in the black and one that remains in the red. Planning for the following holiday season can then begin in earnest. 




Category: Supply Chain Management