Reducing the Risk for Seasonal Goods

With many uncertainties looming over this year's seasonal goods sales, some experts suggest that retailers straddle the fence. Jerry Friedler, an independent consultant based in Milton, Mass., sees the potential to use existing inventory along with imported items. The GMDC seasonal goods report [issued in 2006 and updated in 2007] revealed certain categories and products that had very high indexes

With many uncertainties looming over this year's seasonal goods sales, some experts suggest that retailers straddle the fence. Jerry Friedler, an independent consultant based in Milton, Mass., sees the potential to use existing inventory along with imported items.

“The GMDC seasonal goods report [issued in 2006 and updated in 2007] revealed certain categories and products that had very high indexes at different times of the year — up to 150 to 350 in a lot of instances during Christmas alone,” he said. “Many of the products were things that retailers already stock, like electric toothbrushes, film and men's cologne.”

Friedler encourages supermarkets to closely monitor their own figures and to browse through the GMDC (Global Market Development Center, Colorado Springs) report to see which items are most popular during each season. He recommends keeping shelves filled with top-selling products and scattering clip strips or shippers throughout the store where they will inspire impulse purchases.

Stocking seasonal departments with day-to-day items doesn't require significant lead time. Plus, retailers don't have to worry about closing out a lot of extra product after the season or holiday has passed, he noted.

“I'm not suggesting that retailers stop ordering seasonal goods, but from a lead-time and inventory perspective, it's a lot less risky to use some of what you already have to supplement imported products,” he said.

In a worst case scenario, supermarkets could wait until July or August to see how consumers will adjust to fuel price hikes, the economy and new production standards in China. But the selection would be picked over and there would be a good chance of having the same merchandise as other stores, he added.

Bill Mansfield, president and chief executive officer, VIP International, Garland, Texas, agreed, adding that delaying seasonal orders for “fire sale” pricing may be a fall-back position for a price-focused retailer, but not a substitute for planning and measurement practices.

“A review of the seasonal trend performance, by product group, over a three-year history will identify whether growth or declining interest is at hand,” Mansfield told SN. “The next steps will then be obvious to the well-educated retailer and smarter future buys can take place to provide continued sales and profit dollars.”

Fresh Encounter, Findlay, Ohio, lets Nash Finch worry about the details of importing. According to Eric Anderson, senior vice president of marketing for the retailer, going through a wholesaler has its advantages.

“The wholesaler bears most of the risk on seasonal items. We choose our products in advance, but we always have time to adjust orders before they hit the water,” said Anderson. “We've been fortunate to move through all of our perishables and continuity items last year and we don't have plans to cut back this year either.”

Items like Razor scooters sold like hot cakes there during Christmas. Holiday dishware also sells well. Fresh Encounter stores in touristy areas, like those near Lake Erie, sell an abundance of portable grills priced at $49.99 to campers and fishermen who come to visit, then simply dispose of the grills when finished.

The retailer carefully evaluates each market before selecting what seasonal goods individual stores will sell. As a result, there are seldom leftovers at the end of each season.

“We try to pay close attention to what sells and what doesn't in each area so we don't have too many or too few of anything,” said Anderson. “If we are running low, we also have a local warehouse that we can turn to for replenishing our stores.”

Diligently tracking sales and having several supply options available is crucial to making a seasonal department successful, particularly for smaller retailers, he added.