The trends of customers’ buying habits changing depending on the time of year is known as seasonal demand. This may be related to the changes in season (e.g., there is a higher demand for wool clothes during winter versus a higher demand for sunglasses during summer) or to holidays like Christmas or Diwali.
Fortunately, these fluctuations are quite predictable for brands, making it easier for them to plan. Let’s see what it’s all about.
Ways to Get Ahead with Seasonal Demand Forecasting
Accurate forecasting is the best way to get on top of this demand. As you read earlier, the spikes in demand are somewhat predictable, making forecasting a little easier. Also, brands need to know what they should do with the forecasting data at hand.
Here’s how to get ahead of seasonal demand and make the most of it:
1. Have Seasonal Goals
Set your goals for the season. With it, you have a blueprint for the seasonal patterns and will know what stock levels you need to maintain during these times. It’s crucial to establish these goals so you can assess the performance and compare the sales volume with your goals. Also, when you set a goal, it makes it easier for you to plan your calendar for the next year too.
2. Collect and Analyze Relevant Historical Data
If you want to understand the ways your brand’s seasonality and product demand change during various periods throughout the year, take a look at historical data. You can identify high demand when you look at the previous year’s sales.
You can not only identify what times of the year are most in demand for sales but also what the volume is during those times. It will help you to ensure that you have adequate stock to fulfil the orders, meeting customer satisfaction.
For this, you need to look at a few metrics—forecast versus order accuracy, inventory turnover, forecast accuracy, and order fill rate.
3. Using Sales Insights to Rank and Separate Products
Now, we will take a look at historical sales data to identify seasonal demand patterns and see how the demand changes for different items throughout the year. This can help you assess which products are seasonal, and you can also identify the periods during which the product spikes or drops occur.
For example, an eyewear brand may see a demand spike for sunglasses during the summer. Or an athletic brand may see a jump in their sales before the new year and more people take an oath to start their fitness journey in the new year.
With proper data, brands can estimate the demand changes in comparison to the regular periods. However, this information is not always as it seems. Especially in a volatile market, the fluctuations can be arbitrary.
However, this should not stop you from demand-planning for seasons. Here are a few strategies you need to know.
7 Seasonal Demand Strategies
Forecasting demand based on seasons is an ongoing process that can be improved using various techniques, as outlined below:
1. Identify Products Whose Demand Shifts As Per Seasons
It’s important to remember that seasonality refers to the demand variation explained by a recurring pattern. Therefore, you need to find demand patterns that regularly occur over time.
Have these inquiries when assessing demands in a season:
- Do you see a consistent demand pattern? Analyse yearly associations to confirm seasonality.
- Is the demand shift seasonal or a long-term trend? De-seasonalize to check for ongoing increases.
- Does seasonal demand require a different product approach? Assess the variance amplitude.
2. Know Your Customers’ Seasons
Do you understand your customers’ seasons? Doing so is important as you get ready to estimate the demand. It‘s crucial to know when and what essential supplies you should stock up on.
For instance, buying Christmas gifts begins as early as October. Learn about the seasons of your clients and how they evolve. For instance, many people start shopping early due to the adjustments they made during the pandemic period. This was due to avoiding supply chain issues or shortages that could prevent them from getting the supplies they wanted.
Therefore, it’s crucial to forecast seasonal demand to understand your clients’ seasons.
3. Predict Peaks with Precision: Adjust for Seasonality
For accurate forecasting, adjust the demand for items with significant seasonality before including them in your calculations. Separating demand of the seasons and other variable factors from base demand ensures clarity and precision for future forecasts.
4. Monitor Your Supply Chain
Your supply chain plays a critical role in meeting demand and customer expectations. Consider potential challenges like extended shipping times or increased workload for logistics teams, which could lead to shortages. Staying proactive about supply chain issues helps you prepare effectively for sales surges and customer needs.
5. Describe Current Trends in Your Reporting
Looking at the seasonal fluctuations in demand, you can understand what sales might be like in the year. Current trends, shortages, and consumer needs can have a significant impact on the inventory that you must have.
For example, during the pandemic, as everyone switched to remote work, people needed better communication and networking connections. This saw a significant rise in the demand for the services of the digital sector.
Also, during this time, people chose comfort wear more than athletic wear. So, you can accurately predict the anticipated sales trends and better manage your inventory.
6. Recognize the Uncertainty Surrounding Predicted Peaks
A demand forecast is not always 100% correct. This is more when you include seasonality and dynamic markets. So, you must take your forecast’s accuracy into account.
Find the demand outliers and see how they affect your calculations. This can help to increase forecast accuracy. Calculating forecast eros can also determine the degree of mistake in your earlier demand projections. This allows you to make adjustments to avoid anomalies in the future.
7. Streamlining Procedures
You can automate the process of estimating seasonality wherever it is feasible. All you need is software that will examine the current patterns and directions, previous shifts, and other data about the overall sales. Then it will incorporate that data to assess what your seasonal needs are going to include in the next year.
Automating this process may eliminate uncertainty surrounding your inventory requirements for that season. Your platform will remind you of what you need and when you must order it. You can also make adjustments accordingly in case of surges or supply chain bottlenecks.
When you automate the seasonal demand procedure, you will get important reminders when it’s time to order the seasonal raw materials— a process that you might need to start earlier than usual.
FAQs: Mastering Seasonal Demand in Retail
What does the seasonal demand meaning refer to?
Seasonality refers to the changes that happen in consumer demand depending on the natural or man-made seasons. This can cause product demand to surge depending on the seasons.
Which demand forecasting technique is best for seasonal products?
It relies on the nature of your industry. However, going as per statistics is the most dependable and thorough action. You can combine regression analysis and trend predictions with statistical forecasting to forecast demand based on seasons.
What is an example of a seasonal consumer?
A seasonal consumer could be a shopper who buys holiday decorations, gifts, or clothing at specific times of the year, such as Christmas or summer, based on seasonal trends and needs.
Conclusion
Products likely to have seasonal or periodic patterns include apparel, holiday decor, and fitness gear, making accurate demand forecasting critical. By understanding these patterns and proactively addressing supply chain challenges, you can align inventory with customer needs and maximize sales opportunities. Partner with Qodenext to streamline your supply chain logistics and meet seasonal demand with precision. Ensure you’re always ready to meet demand effectively.
