Seasonality in retail refers to a predictable surge in sales during a specific time of the year, due to certain recurring event or “season”.
Examples of Seasonality in Retail
It should be noted that seasonality differs from one retail segment to the other and from one region to the other. That’s because it is tied to certain events or seasons happening in this particular region and for this particular retail target market.
Below we will list some examples from different segments and regions.
One of the most popular examples of seasonality in retail is the holiday season in western countries. It is tied to Thanksgiving and Christmas time and is driven by increase in shopping for gifts.
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Back to School Season
For retailers that sell products that are related to schools & students, the Back to School season is a very strong time of the year.
However; this is a classic example of how seasons differ from one segment to the other, and can actually adversely affect each other.
For example, during the back to school season, other retailers that don’t sell related merchandise see decreased spending.This is because parents allocate more of their spending to back to school purchases, and so they decrease spending on other items.
There are two main seasons in fashion: Spring/ Summer and Autumn/Winter.
At the beginning of each season, fashion retailers launch new collections and see surge in sales, driven by newness, and at the end of the seasons they hold end of season sale to clear remaining items.
They are usually labeled by the initials of the season names and the year.
SS21 = Spring/Summer 2021
AW22 = Autumn/Winter 2022
*Autumn/Winter is also referred to as Fall/Winter
Eid Shopping for Middle East Retailers (End of Ramadan)
In the Middle East, the holiday season is not as strong as in western countries, but there is another time of the year that sees the highest sales.
This time is tied to religious holidays (Eid or feast) and come at the end of the holy month of Ramadan. Because of the changing time of this event every year, retailers need to align with it and put it in their retail calendar while planning for the year in advance.
How to Deal with Seasonality as a Retailer?
The right way to deal with seasonality is through planning for it in advance, by defining the dates and incorporating them in all the different planning activities a retailer does.
Cash Flow Planning
Because sales are not constant every month in seasonal businesses, it is important to plan cash flow accordingly, so that the business can keep operating in low months from the surge in sales and cash generated form the high months.
This also means that the business needs to make the best out of the high season, because this is what will keep it afloat during other times of the year.
In order to make the best out of the season, the retail business needs to be ready with the right inventory level to support such high sales.
This is done through the retail budgeting process that sets the right sales targets for each month, and then those sales numbers are used in the Open to Buy process to plan inventory purchases to support sales.
While planning the inventory, there are two things to take into consideration:
Seasonal Merchandise Planning
Buying the right amount and type of merchandise relevant to the season. This includes the right quantities, but also the right options and product mix.
Aligning the Receiving of Orders
Due to the fact that seasons have a narrow window, and certain merchandise can only be sold during that window, it is crucial to align and ensure arrival of such merchandise on time.
Any delays in receiving would mean missing on the sales for the season and having to sell this merchandise on discount.
Again, this can be done with proper planning and placing the orders based on order lead time, and dealing with reliable suppliers & wholesale vendors who have the capacity to deliver on those orders on time.
To support the sales and make the most out of the season, retailers need to have proper manpower planing in place.
Scheduling needs to be done in advance, and any retail hiring requirements for additional temporary staff needs to be planned and aligned with the business need during this time of the year.
Changes in Seasonality
It should be noted that, while seasonality is predictable for certain times during the year, there are changes that sometimes start to emerge.
For example, over the last few years, in some parts of the world, winter was getting warmer. Many retailers were in a position where they had excessive winter merchandise that is now not in demand anymore.
Adjustments of budgeting & planning processes need to be done every year, based on feedback from the market and the stores.
New trends should be spotted in advance whenever possible, and changes in climate or buying behavior should be accommodated in the planning process.
Retailer & Founder of Retail Dogma, Inc.
Rasha has 14 years of retail & ecommerce experience. She has started an ecommerce business in 2008, and later worked at H&M, Bath & Body Works, Victoria’s Secret and Landmark Group. She’s lived in 4 different countries, speaks 3 different languages and holds a BSc in Pharmaceutical Sciences and an MBA in Strategic Management & Marketing.