Inventory Management Strategies for Peak Season & Holiday

Inventory management and inventory accuracy are of the utmost importance for any successful business. It’s something you need to keep track of as a basic rule, but there are certain times when it really becomes make-or-break.

We’re talking about the busiest shopping periods of the year and the strain that can place upon your collective shoulders. Peak season doesn’t have to bring stress, though. Instead, it’s your opportunity to capitalise on spikes in demand and benefit from rapidly increasing sales - so long as you have the supply to meet customers’ needs. 

Here, we’ll break down the best inventory management approaches to ensure you’re on top of stock and sales as the rush comes your way during peak season and holidays.

What is Seasonal Inventory Management?

As you might surmise, Seasonal Inventory Management is the process of strategically curating and maintaining your inventory in anticipation of and response to significant fluctuations in demand, as dictated by a given time of year, often a specific season such as Christmas. 

Christmas, given its long-standing and highly lucrative annual commercial association, is a fairly obvious one, but it’s not the only one. It’s not just about marketable holidays, either. Different times of the year can introduce unique challenges that negatively influence your inventory, such as weather-based barriers and cost-of-living issues. 

There are many time-specific instances to predict and plan for accordingly, and you’ll want to avoid both overstocking and understocking as you do so.

Common Seasonal Inventory Challenges

Let’s talk about some of those seasonal-themed challenges. 

Demand Forecast

You’re not a mind-reader, but you ought to be able to anticipate the kind of traffic and sales generated by bespoke time periods during the year, be it short bursts or longer term. Prepare for things to sky-rocket, and you’ll reap the rewards. 

This should always be in your mind, even months out. You need to properly plan and budget for these periods, with your inventory acting as a real-time response unit for consumers. 

Inventory Shortages / Overstocks

Failure to correctly assess demand for certain products is likely to result in the phrase ‘out of stock’ becoming commonplace. Sure, it’s great if a particular item is so hot you simply can’t keep it on the shelves, but the potential for lost revenue here is gigantic. 

One only need look to North America, where on average, consumers say that one in five products they wish to buy at their local retailer is frequently unavailable for purchase. Overstocking an item that people don’t want, meanwhile, isn’t a viable substitute. 

‘One in five’ might not sound like a disaster, yet the total cost to retailers when it comes to Inventory Distortion - this being the combined cost of out-of-stocks and overstocks - is estimated at a staggering $349 billion per year, as of 2022.

Dead Stock

‘Dead’ stock is the bane of any business - stock you just cannot shift, no matter how hard you try. It takes up space, it costs you money, and it stands out like a sore thumb during peak shopping season. 

Explicitly-seasonal-themed products, for instance, may as well have expiration dates stamped on them. Shifting Halloween, Valentine’s Day, Easter, etc-focused stock the minute the clock strikes midnight on its respective holiday is a thankless, nearly-impossible task, even when you bring heavy discounts into the mix - and even then, flash sales aren’t exactly money-spinners. 

The image of trashing a bunch of unwanted stock isn’t a good one, or an environmentally-friendly one. So, you’ll need to look ahead and be smart with your inventory. 

Inventory Inaccuracy

Inventory Accuracy is vital and can help you out in many ways. On the other hand, an inaccurate inventory management system is going to cause you no end of easily preventable problems. Click here for our step-by-step guide on how to implement and improve it. 

Supply Chain Disruption

Remember, it’s not always as easy as diligently ordering your stock and having it arrive seamlessly in quick-sharp time. On occasion, your supply chain can be disrupted, leaving you feeling stranded and frustrated.  Pressure on the supply chain is beyond your control, but you have the foresight to expect potential delays and transportation issues to accompany sudden increases in demand, dramatic weather events, or even political clashes, so plan appropriately in this regard. 

How to Forecast and Plan for Peak Seasons

As noted, your stockroom is unlikely to house a magical crystal ball that gives you pinpoint readings of the future, but you can still forecast and plan with confidence and accuracy. 

Consider the following steps:

Analyse Historical Sales Data

The numbers don’t lie, so use your previous sales records as a yardstick for customer preferences. Identify and isolate products that sold out quickly while making note of the ones that didn’t. 

Consider Market Trends and Economic Factors

Responding to the world at large is essential for your business to function and thrive. Take note of any substantial shifts in consumer trends, with a keen eye on the exact times of the year when spending spikes emerge. 

The overall - and prone to rapidly shifting - state of the economy is also a huge consideration. ‘Cost-of-living’ is a phrase that makes regular headlines, while the fear of imminent recession also has a major influence on buying behaviour. 

Positive trends are both possible and welcome, so stay tuned in to economic movements both on a national and international level, and make informed decisions.

Consider Sales Promotions and Marketing Campaigns

When it comes to shopping, people have a reasonable expectation that a new season - and its various limited-time sub-categories like Easter and Halloween - brings with it the possibility of across-the-board sales. 

‘Black Friday’ has effectively become a cultural landmark in and of itself, first starting as a shopping-focused Thanksgiving tradition in America. Today, it’s a worldwide phenomenon, embraced by both punters and retailers. 

There’s no law that says you must respond to each and every commercial-focused seasonal opportunity, but a SALE sign is always attractive to the eye. Coupled with a smart marketing campaign, this approach should help you stock up appropriately, and perhaps even shift some unwanted / slow-moving products in the process. 

Seasonal Management Inventory Strategies

Getting the inventory balance right during the busiest periods can be a challenge. Let’s look at some strategies you can employ: 

Set Optimal Inventory Levels

Simply put, the ideal amount of stock available to meet customer demand while keeping your books in order. There are multiple factors in play here. 

You’ll need to analyse demand forecast, stock turnover, the type of products you house, your maximum, minimum, and safety stock levels, and the lead time for each supplier.  You can then apply the EOQ Formula (Economic Order Quantity) to calculate your optimal inventory. The formula is made up of the following: 

• H = Holding Costs (per year, per unit)

• D = Demand Rate (quantity sold per year) 

• S = Setup Costs (per order, including shipping and handling) 

EOQ = √ [ (2 x S x D) / H]

Utilise Inventory Management Software

Implementing a dedicated warehouse management system in the form of a reliable software program should save some time and hassle, as should a clearly outlined inventory spreadsheet.  Assign barcodes to your items and check them off with a scanner during your count, cutting out the old pen-and–paper method. Unless, of course, an old-school method works for you.

Implement Pre-Order and Backorder Systems

Pre-ordering is an increasingly common and highly effective method of guaranteeing sales. It also has the potential to create a buzz about a product, thus driving demand for it.  Where possible - particularly in the online space - introduce the ability to pay for the product in advance. A clearly defined timeline and release date is recommended here, thus ensuring the customer will receive it the moment it becomes available for dispatch. 

The same general idea applies to backordering, whereby a customer is happy to wait for an out-of-stock product to become available for sale again. A ‘notify me when back in stock’ tag can turn a dead end into a sale, but be careful only to label items as such that you are fully confident of re-supplying in a timely manner. 

Optimise Warehouse Layout and Picking Processes

Fundamentally speaking, your warehouse should be easy to access and quickly navigate, not to mention free of unnecessary clutter. Your stock and how you arrange and store it should reflect this, so define and designate areas in clear and compact fashion.

Try out the ABC method, which breaks down your items into a simple but effective hierarchy:

A = Essential goods with the highest value / will generate the most profits.

B = Goods with a slightly higher value / mid-tier products.

C = Goods with the least value / likely to generate the least amount of revenue.

When it comes to picking processes - the physical act of taking a product from your inventory for the purposes of a customer order - you’re looking for the balance of saving time without compromising on the handling and integrity of your stock. Options include:

• Single-Order: Where the designated order picker selects a single item at a time.

• Batch / Multi-Order: The process of picking an order for multiple items in one go. 

• Cluster / Wave: Handling multiple different orders simultaneously, using separate containers marked to correspond with each individual order. 

• Zone: Assigning different individuals to specific areas of the warehouse / storage space. 

• Automated: The use of dedicated software to automate the picking process.

Consider Outsourcing Fulfilment During Peak Seasons

When it comes to the crunch of high-pressure retail, things may get on top of you. Assistance might be the answer. You might consider turning to an order fulfilment company, preferably one with experience of peak seasonal activity, and one that can operate locally and internationally.  

Communication is Key During Peak Seasons 

‘It takes a village’, as they say. Whether you’re a determined one-person outfit or a vast mobile army, you’re going to have to develop and maintain lines of communication in order to make the most of the busy periods.  On a base level, your demeanour sets the tone for everything. Keep this in mind for the following areas:

Interact with Staff

The busiest shopping periods of the year often invite pressure, so it’s best to develop a positive energy amongst your staff, allowing for the possibility of mistakes and providing an environment where encouragement and solutions are ever-present. Keep things friendly but spell out that complacency and negligence aren’t acceptable. Think of it like a teacher in a classroom. 

Establish a Strong Relationship with Suppliers and Partners

You need them and they need you. Unless you’re handling every single aspect of your empire by yourself - including delivering the product to your customer’s door - then you’re in a business of relationships, so handle with care. Treat your suppliers and partners with respect and you can expect the same in turn. Be clear and honest in your communication, and be mindful of other people’s time and responsibilities - don’t create avoidable extra work for them. 

Proactively Communicate with Customers

You know all the clichés by now, but they bear repeating - the customer is the ultimate master that you need to serve. No customers = no business. It’s that black-and-white, so ensure that your approach to customer service is top-tier. Talk to them. More importantly, listen to them. What are their needs? Are you correctly addressing them? Do they trust you? Will they do business with you again? Ask questions, learn from the answers.

Post-Peak Season Analysis

Speaking of learning from answers, you really should carve out some time to analyse how the peak season unfolded for you and your business.  This task will identify areas for inventory improvement, and give you a head-start for the next designated busy period in the calendar. Ask yourself:

• Did I have enough stock? If not, why not? 

• Did I overstock unnecessarily? 

• Was my demand forecast effective? 

• Is my approach to inventory accuracy working?

• Was the warehouse easy to access and manage? 

• Do I need more or less storage space?

• Are the picking processes effective?  

• Did I need extra help to manage the inventory and outgoing orders? 

• Did our suppliers and partners meet expectations? 

• Was my communication beneficial to staff, suppliers, and customers? 

• Where can I improve? 

• Are my customers satisfied? 

   

How DHL Can Help?

DHL Express Commerce has everything you need to effortlessly manage your online orders, so you can spend more time working on your business. DHL Express Commerce seamlessly integrates with Shopify, WooCommerce, and many other platforms to deliver shipping rates and automate shipping.  

We also offer on-demand delivery, allowing your customers to choose precisely when and where their orders are delivered.  Finally, our dedicated returns process enables customers to drop off returns at a DHL service point or partner, bringing costs down and generating fewer carbon emissions.