It may be equal parts prognostication and promotions all year, but managing
inventory in the final quarter of the year has turned into a game of spinning
plates. As retail seasons for Christmas and Halloween expand, store managers
need to get creative to make the most of the opportunities. Generally,
the expansion of Christmas and Halloween has turned Thanksgiving into
the weak sister of the fourth quarter holidays, according to Ellen Tolley,
spokesperson for the National Retail Federation.
"In the last several years from the retail standpoint, Thanksgiving
has lost a lot in the shuffle," she notes. "When Halloween is
over, it's all about Christmas. Really, most of this starts with the onset
of the fourth quarter, though most people are starting to shop for Christmas
early in the summer."
Complicating matters is an explosion of products competing for shelf
space, according to Johnny Girson, president of the American Specialty
Toy Retailers Association and owner of The Learning Tree
in Prairie Village, Kansas.
"Too many manufacturers [have] ‘me too’ products," says Girson,
assessing the situation. "With manufacturers copying each others’
product ideas, we are overwhelmed with product choices."
Retail consultants acknowledge the difficulty managers face, but there
are things retailers can do to reduce their risk.
"Inventory is a balancing
act because you don't want to end up with inventory left over, but
you also don't want to have empty shelf space. That's just telling
the consumer you are not a reliable supplier."
"There's a lot of stuff that's under their control," notes
Howard Davidowitz, chairman of Davidowitz & Associates,
a national retail consulting firm based in New York City. "How they
promote the merchandise. How they display the merchandise. How they romance
the merchandise. How you price the merchandise. You're limited by your
own creativity, imagination, drive and ambition."
Davidowitz notes that among the challenges for the toy retailer is advanced
ordering.
"There are sections of retail where just-in-time inventory has been
great," he says. "Take the food industry. They can turn their
inventory over 18 times a year. In the toy business, you have less opportunity
to do that. You can plan on flowing-in inventory. The problem is you have
to commit to it. If you don't commit, you risk not getting [sales]. You
really have to be a swami."
While peering into a crystal ball might appeal to some, Tolley notes
many retailers are searching for the "next big thing," a phenomenon
that has not really been present for several holiday seasons.
"I see many retailers taking cues from pop culture, whether that's
two weeks out or two months out," she says. "Some of it comes
down to dumb luck, and some comes down to good research."
Jon Schreibfeder, president of Effective Inventory Management
Inc., favors the latter.
"What we do is keep meticulous records on successes and failures.
We try to define meaningful characteristics, see what sells and what doesn't
sell,” he explains. “How well have the products with the same characteristics
sold in the past? If you have a toy store and three of your buyers say
it's going to sell, it's going to sell. If one says it will sell, and
the other two say they don't know, it probably won't sell."
Generally, Schreibfeder believes 80 percent of sales come from 10 or
15 percent of a retailer's stock, so it makes sense to identify those
products and keep them on the shelves. He believes balancing the shelf
space for the competing seasons is a growing challenge.
"The season is certainly longer than it was in the past," he
says. "By September 1, most stores will be setting up their Christmas
displays or have their displays up already. They want to look for impulse
purchases early. The more opportunities consumers have to buy, the more
they will buy."
To manage these challenges, Schreibfeder says many of his clients establish
a seasonal section of their stores.
Eighty percent of sales come from
just 10 or 15 percent of a retailer's stock, so it makes sense to
identify successful products and keep them on the shelves.
"I have one client who had their Halloween stuff out by October
1 and some of their Christmas stuff out," he says. "The morning
of November 1, we struck all of the Halloween stuff. We did put out some
Thanksgiving material.”
"The key to all of this is keeping the shelves stocked," Schreibfeder
continues "In this case, we rented additional space. They were in
an area where finding additional warehousing space was difficult and expensive,
but it still paid off."
The importance of keeping the shelves stocked is essential, Schreibfeder
says.
"It's a balancing act because you don't want to end up with inventory
left over, but you also don't want to have empty shelf space," he
said. "That's just telling the consumer you are not a reliable supplier."
