Christmas creep recently entered the holiday shopping lexicon as retailers begin constructing storefronts with cheery décor and playing Jingle Bells before Thanksgiving is even a twinkle in the eye of many consumers. Add to that the flurry of online holiday shopping and the bottleneck those items can cause logistically when competing with coast-to-coast gift-giving. That means retailers are preparing earlier and earlier for the onslaught of consumers, and to compete, so must you. Are you ready?
According to Melanie Alavi, UPS Retail, “With the rise of online shopping, the holiday season is more compressed and retailers are responding to by launching holiday promotions earlier in the season. Black Thursday is a prime example: Many retail customers are planning to be open on Thanksgiving to get an earlier start on the holiday shopping season.”
The earlier you begin to plan your holiday sales season, the smoother it generally goes. Melanie Nuce, vice president of apparel and general merchandise, GS1 US, says that you should start about six to eight months out from the holiday season from a supply chain planning perspective. She also notes, “Most retailers need a 15-day ramp-up when bringing on holiday help. Since it takes a couple of weeks to onboard someone and train them, you have to have a strategy to account for the slowdown in volume and operations to bring on those new team members. Have that plan in place well ahead of the time you actually see the increase in demand. Staffing is critical, so know when your busiest time is coming and have those people hired. For the holidays, it should be before Nov. 1.”
“Companies need to plan ahead and spend the time reviewing their past sales data during the holiday seasons, and create a sales plan with an inventory strategy,” agrees Nick D’Alessio, global practice leader of retail, Zebra Technologies. “Responding to a sudden demand increase in the middle of the holiday season can be devastating, especially when out-of-stocks occur. This can create lost sales/revenue that you cannot recoup. If the products are commodities, do you have second source suppliers that you can diversify and spread your demand across? If they are specialty items, have you negotiated supply allocation replenishment terms with your suppliers? The point here is to start planning before the holiday season arrives—not during.”
Then again, premature planning can be inefficient, too, in terms of rework and lost opportunities, unless the plan is constantly re-evaluated as the holidays draw near. While every market varies, Jonathan Scheele, vice president of supply chain solutions, Ingram Micro Mobility, suggests, “Preparations for Q4 should be thought out at the beginning of Q3 and well into implementation by the end of Q3. This plan should include determination of anticipated holiday shelf-keeping unit (SKU) proliferation by model, channel and region, and developed marketing concepts and packaging designs for holiday promotions. Another consideration is that pallet displays, end caps and promotional packaging may vary between direct-to-consumer SKUs and retail SKUs, and even between retailers. Delaying final customization of finished goods allows a company to leverage the advantages of both push and pull supply chain models. It allows for aggregation of demand for common component SKUs at the manufacturing phase, giving more scale to the manufacturing process.
“Product postponement also minimizes labor and materials requirements for final configuration until there is firm demand from the customer. For this reason, delayed differentiation plays an important role in optimizing a supply chain, even during the frenzy of the holiday season. Conversely, abandonment or disregard for effective product differentiation planning can lead to packaging rework either at the manufacturing facility, third-party logistics partner or distribution center. This creates unnecessary waste in materials, labor and time, not to mention potential lost sales if the product isn’t available on the shelf.”