Due to the long and rigid lead times that come with seasonal goods, it often forces retailers to place orders months in advance. In some cases, inventory arrives earlier than anticipated, especially for holidays like Easter that have a very short selling window.
Georgianna Ma, Partner, EY Canada, said when people talk about seasonal in retail, it’s a natural theme that they’re creeping in earlier.
“It’s not necessarily a new thing because the actual cycle starts way before the actual holiday hits. The ordering, the inventory, and even a lot of the planning starts months ahead. So what we typically see as consumers as too early is usually in the final steps of that process,” said Ma.
“Why does seasonal merchandise and even décor come earlier? Most of the time they’re designed, manufactured, and ordered probably six to nine months in advance. A lot of them are obviously imported from other countries, especially in Asia. So now we have to build in production time, freight time, and unexpected delays as well.
“Technically, a lot of the products actually reach the store months in advance. Most retailers are looking to either sprinkle the inventory throughout earlier and earlier, especially the ones that don’t take up a lot of space, and then really let the floodgate open by putting a lot of the bigger items on the shelves earlier.
“Part of it also helps with not storing it for a longer period of time. We don’t want overflowing warehouse spaces and in-store space, especially for bulky items. They want to make sure they don’t have to store it for a longer period of time. Sometimes they introduce smaller seasonal items earlier, and then the bigger items gradually expand as it gets closer.”
Ma said there are definitely benefits of being first to shelf.
“There’s the first-to-market advantage and a competitive element to it. When you get it on the shelf first, that early placement makes sure that you get that advantage,” she explained.
“A lot of the time you’re putting the holiday in the consumer’s mind before it even comes. It signals to them that the season is coming and that you kind of need to act on it. More and more retailers move earlier, and once competitors see others putting it on the shelf, they follow because they don’t want to lose that share.
“There’s a natural tendency where people are just pulling it forward and having that inventory earlier. They also face a cost because if you don’t put it out, there’s a cost of storing it. So they want to sell it earlier and put it on the shelf earlier. That way, you capture the revenue sooner as well.”
Ma said the longer holidays get planned and retailers have a little bit more buffer room to play with. But when you’re talking about Easter or Valentine’s Day, which are one-day holidays or only a few days, there’s even more urgency to get it out sooner. If you don’t sell it for that day, you actually have to heavily discount the product afterward.
From a merchandising perspective, getting that timing right is quite crucial. If you’re not capturing the sale before the holiday or before that couple of days, then you have to do some pretty deep markdowns afterward if you didn’t get the demand right properly, she added.
“Most of the time, when it comes to merchandising and inventory planning, depending on the specific retailer or even the subset of retail, some have a pretty good idea of what they’re going to sell anyway. Some SKUs are maybe not as replaceable,” said Ma.
“Sometimes they might have very specific SKUs where it’s less about the timeline, they have to get those specific products in. Versus others that are more interchangeable, that’s where the timeline will come into play.
“At the end of the day, they usually plan these calendars in retail months in advance. Like we said, it’s a pretty fixed calendar. Most of the time it’s a repeat. They literally have that plan and just turn it on every year at that time. So I would say it’s quite predictable.
“The only unpredictable part is the disruption that we’ve been getting. For example, the pandemic, port congestion, shipping delays, or unexpected supplier shutdowns. That’s where they would have more of what we call a just-in-case model, where we have buffer stock. If those are critical items, then you will order earlier in advance to make sure you don’t miss the window.”
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