How Much Stock To Order For Christmas: What Small Businesses Need To Know
As the festive quarter gets ever closer - one question on retailer’s and brand's minds will be how much stock to order.
It can feel very abstract and difficult to quantify how much a business might sell during the busiest periods of the retail year, however there are some starting points to ensure the process is more focused, planned and ultimately results in successful Christmas sales and stock management.
Start with the star products
Firstly, retailers should review their hero products, they are crucial for Christmas planning as they are the building blocks for a Christmas campaign. Often, they are items in a range that are very giftable, suitable for the Christmas season, that doesn’t mean they have to be Christmas themed but of course can be.
Bestsellers throughout the year are usually chosen as hero products by the big retailers and then become a focus for Christmas. Retailers consider hero products first and foremost – it’s what they will spend most of their time thinking about. Looking back at the sales history of those products will be key – thinking about the 80/20 rule – 80% of sales are likely to be coming from 20% of products.
These are the products that will feature on a business’s homepage, social media feeds and in emails campaigns. Budget will be spent on obtaining great images showcasing these products to really make them shine.
Get clear on the sales plan
A sales plan for the last quarter of the year is obviously vital, it’s the largest selling period for retailers. Without one it’s very hard for a business to get a sense of how much stock they should order in. Many newer businesses will have to make assumptions about Christmas sales – such as will October be 50% up on an average sales month, November even higher and so on.
The big retailers know well, sales plans are not about being 100% accurate but using some solid history and knowledge about sales figures to forecast this period – it will be different to the rest of the selling year. It also gives businesses a goal to aim for and work hard to achieve whilst being able to check in with a structured plan throughout those 3 months - pivoting and adjusting where necessary.
Which is worse - too much or too little?
This varies depending on the product. For each product item ordered retailers should be asking this question. If a business stocks an overtly Christmas themed product, a Santa candle for example, they don’t want any of that stock leftover come the 26th December. Sitting on this type of product until the following year can impact cashflow, cause storage issues or worse if it’s a perishable item it goes to wastage – so ordering on the conservative side is the right option.
At the other end of the spectrum a product that a business sells well all year round, is likely to have a spike at Christmas but also may have long lead times – is the product you want to order generously, based on figures and assumptions. In this case the worse thing to happen is running out of stock and not having time to reorder.
So retailers do need to take calculated risks for their decision making process on how much stock to purchase for Christmas, however these decisions will be informed by sales history and patterns, alongside some informed assumptions.