Happy Halloween: Inventory Planning for Retail’s One of the Biggest Spending Holiday
Global pandemic kept trick-or-treaters at home in 2020. After a Halloween-less year, this year is going to be spookier than ever. Retail’s second-biggest spending holiday is around the corner and your Halloween shoppers are ready to celebrate.
According to National Retail Federation, Halloween consumer spending in the U.S. is expected to reach an all-time high of $10.14 billion — up from $8.05 billion in 2020. It’s also higher than 2019’s $8.8 billion. On average, consumers plan to spend $102.74 on costumes, candy, decorations, and greeting cards — $10 more than they planned to spend last year.
These Halloween sales projections show us that there is a significant opportunity for retailers to grow their businesses and increase profits. But the scariest thing for them would be not having the right amount of Halloween products in the right place at the right time.
Planning for Halloween demand
For many retailers, planning for Halloween demand can make or break their profitability for the year. If you don’t forecast demand accurately, put products in the wrong place, then you lose sales in some locations and have stranded inventory in other locations.
If you overstock an item before Halloween, you have to deal with high storage costs. But, on the other hand, if you’re too late to put the Halloween merchandise in the shelves in early fall, then you’re in trouble because if a customer can’t find what they’re looking for at your store, they will shop somewhere else and may never come back.
And after all, on November 1st, Halloween merchandise are not worth a nickel, and you have to get rid of the left-over stock anyway.
From an inventory planning perspective, planning for huge demand spikes during Halloween can be complex. Here is how retailers can better manage their seasonal inventory and make the most of this holiday season:
Benefit from robust, allocation-specific forecasts
Allocating Halloween items can be a tricky for retailers as there is a new set of products every year, and it’s not easy to predict how well and when they will sell. The main challenge is accurately forecasting demand – especially in volatile environments with constantly changing trends. For example, this year, Netflix’s “Squid Game” thriller became tremendously popular, and Squid Game costumes are already a Halloween hit. There was no way for retailers to predict the demand a few months back.
Not only that, but the Halloween season is very short for replenishment. As Halloween products’ shelf life is very short, if you don’t sell it before the end of October 31st, it will cause unnecessary markdowns and shrink already thin margins. So, retailers need to improve their merchandise planning decisions to maximize sales, minimize stranded inventory costs and reduce markdown losses. They should also make the most of their merchandise and take advantage of AI-powered allocation-specific forecasts to anticipate demand -even for the new items with a unique combination of product attribute data.
Make profit-optimized allocation decisions
Planning for Halloween places significant stress on supply chain planning processes and planning teams but, it doesn’t have to be. Achieving the perfect inventory allocation during Halloween can help you avoid the fright. Today, it’s possible to make profit-optimized inventory decisions balancing lost sales vs. left-over risk at stores and avoid unnecessary markdowns.
At Invent Analytics, we help retailers to position inventory optimally anticipating the seasonal sales and consumers’ fulfillment needs with the right allocation decisions. Our Allocation Optimization makes products readily available at stores for fast pick up by or delivery to customers while avoiding overflow inventory to stores. By sending the right amount of inventory to your stores, you can reduce left-over risks at stores and early stockout risks at distribution centers. As a result of the dynamic and smart positioning of Halloween inventory, you get higher sell-through and reduce overall fulfillment costs.
Interested in getting allocation right for seasonal items? If so, get in touch with us today.
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