During the holiday season, both retailers and manufacturers must consider a variety of factors when planning their purchase orders. Holiday shopping behavior is volatile, and while some predictions can be made on what happened last year, the best strategies rely on a combination of planning and adjusting based on purchase behavior. 

Visibility and speed are the two most important factors that can help improve execution. If there is shared information between retailers and manufacturers, they can collaborate on purchase orders and make recommendations based on that shared data set. Likewise, if there is quick visibility regarding how items are performing on shelves, manufacturers and retailers can adjust as needed. 

Common Challenges for Seasonal CPGs in Supply Chain Execution

The holiday season presents a lot of opportunities for CPGs, as well as some unpredictability. Seasonal spending shifts from year to year, so it is important to have an accurate view of shoppers and their spending habits. This ensures that both retailers and manufacturers can quickly react and update strategies that reflect near-real-time purchase behavior. 

Retailers Have Limited Shelf Space

Retailers have limits when it comes to their shelf and warehouse space. There is no shortage of brands sending additional products for almost any category during the holiday season. With these limitations, it is vital that the purchase order aligns with demand forecasting that is fine-tuned to store-level purchase data. Assuming one store will sell just like another store can lead to a misunderstanding about the unique audience segments and need-states of different consumers living in proximity to different stores. For example, a store in the suburbs might sell significantly differently from a store in the city due to the very varying lifestyles and needs of those local consumers.

Consumer Purchasing Behavior is Volatile 

The holidays are filled with changes in consumer behavior. People are often shopping for others that they may not have shopped for before. For retailers and manufacturers, this means there is ample opportunity for brand penetration, as consumers may be more likely to buy from new brands or even browse categories they don’t frequently shop. However, this volatility also leads to a level of unpredictability. Brands need to have data-backed insights into how consumers will engage with them, while retailers and manufacturers need to understand how consumers' shopping behaviors might change during the holiday season. 

Tip: Although historical data can be leveraged to help predict consumer behavior, having access to current consumer data and market trends, especially around holiday shopping, can help you better forecast demand. 

Aligning on Product Orders 

For both the retailer and the manufacturer, the ideal world is one where the right amount of product gets to the shelves and sells out over the course of the holidays. That also helps retailers better manage the post-holiday markdown and clearance process. To reliably place purchase orders, strong communication is needed between retailers and manufacturers, alongside data-driven strategies. For example, a manufacturer might want to point to how their items sold last year when recommending larger purchase orders. Likewise, as a retailer, you can use previous data to justify purchase order sizes and share that data with manufacturers to improve supply chain execution throughout the season.

Eating Costs, Perishable Goods and Inventory Holding

The worst position to be in is one where there is too much product, and it does not sell. This is especially true for perishables in the food and beverage industry, and truly seasonal items. There is no room for error when working with items that have limited shelf life or have no sales opportunities after the season is over. 

Running Out of Stock at The Right Time

A common misconception about supply chain logistics and execution is that out-of-stocks are always a problem. When it comes to seasonal shopping, especially when considering seasonal products and items, your goal should be to run out of stock, but specifically at the right time. Excess inventory of seasonal items causes problems for both retailers and manufacturers. With collaborative visibility between retailers and manufacturers, you can plan potential markdowns and promotions based on how items are actually selling. 

Of course, this requires both a shared view on in-store and on-shelf performance and a system that gets you access to that data quickly, so that decisions can be made effectively. With data from retailers, you can track what is selling where, and more importantly, what isn’t selling. Manufacturers often suffer the most when items don’t sell, since they often absorb the cost of recovering items that didn’t sell and pay a further price next year with smaller order quantities. With the right supply chain data solutions, manufacturers can quickly analyze where their products aren’t selling and potentially make changes to help move that product.

Demand Forecasting and Inventory Tracking for Seasonal Products

Historical data plays a large role in demand forecasting, but there are other elements to consider. A variety of internal and external factors can change consumer sentiment towards specific brands or overall categories. By finding a data partner that can combine insights across your supply chain execution with your marketing performance measurement and place those insights against external signals for market performance and consumer behavior, you can more accurately forecast demand. 

For example, through historical data, you can understand how similar items performed in stores last year and use that data to make predictions for the upcoming season. But that data tells only part of the story. You can go a step further by investigating current consumer shopping patterns and potential expected changes in behavior. Both retailers and manufacturers can benefit from up-to-date market analyses, especially regarding shifting purchase behaviors for their categories. This can help both with the planning phase and with execution. If items are not moving fast enough due to a decrease in consumer spending across the category, retailers and manufacturers can have plans in mind to discount items or adopt different in-store strategies. 

The Importance of Shared Supply Chain Visibility for Manufacturers and Retailers 

The key to supply chain execution is a strong relationship between retailers and brands built on shared purchase data. Circana’s supply chain solutions help both parties share a single view into performance. As a manufacturer, you can use this data to help make recommendations for purchase orders that directly relate to real purchase data for your retailers. Retailers and manufacturers can use this data to get a quick understanding of sales performance during the holiday season, so any adjustments can be made when they would be most effective. With shared supply chain visibility, you can make the most out of valuable purchase data to understand and track trends, iterate, and improve.