How Seasonal Trends Affect Inventory Management Strategies

Seasonal trends impact businesses in significant ways. In the case of small businesses, nearly half of companies rely on holiday shopping to obtain one-quarter of revenue, with some experiencing nearly 90% of yearly revenue during this time. Larger businesses also feel the impact of seasonal demand, many times in the form of inventory level fluctuations and excesses after peak seasons. 

Regardless of the size of your business, effective inventory management is crucial for navigating seasonal demands and delivering exceptional customer experiences to empower business growth. In this guide, you can learn more about the relationship between seasonal trends and inventory management strategies to embrace solutions for your business. 

Understanding Seasonal Trends

Seasonal demand refers to purchasing behavior fluctuations throughout different times of the year. Seasonal trends vary by industry. In some cases, holidays and cultural events will shape purchasing behaviors. However, industry-specific trends and even weather changes can impact seasonal trends. Understanding your industry and implementing trend analysis can highlight which events or time frames can be the most impactful for your business. 

What Is Trend Analysis?

Trend analysis refers to the process of using historical data to make future industry or business predictions. Companies can leverage this information to scale inventory up or down to meet demand while optimizing resources. It is beneficial to analyze your company-specific historical data alongside industry information to determine how your business responded to trends in the past and identify opportunities for improvement. Additionally, note peak opportunities and times when you should scale back on inventory to avoid excess during off-seasons.

How to Use Growth Trends

While each industry and business can have a unique relationship with seasonal trends, there are several common trends to note. Use these examples to identify seasonal effects and time frames:

• Holiday seasons: Big holidays like Christmas and Thanksgiving often cause big spikes for retail industries. Sales tend to surge as people look for gifts for loved ones or themselves, try out new recipes, or purchase festive decor to welcome friends and family.
• Seasonal events: Other notable trends occur with annual events like back-to-school shopping or summer vacations. These times of year encourage people to embrace new styles and prepare themselves for the days or weeks ahead. 
• Weather-related trends: Depending on your business location and audience reach, you may also see significant trends when the weather changes. For example, winter clothing and summer goods generally hit the shelves at specific times of the year.

The Impact of Trends on Seasonal Inventory Levels

The massive impact of seasonal demands affects inventory levels in several ways, introducing challenges such as:

• Stock-outs: Seasonal trends can lead to spikes in demand for certain products. For example, holiday gifts and decorations spike around November and December. Businesses must prepare to respond to these demands to maintain their reputation as reliable and responsive. Failing to meet demand could result in lost sales and disappointed customers. 
• Overstock: Alternatively, demand can falter or be less disruptive than you anticipated. Some businesses may expect a higher demand for certain products than they receive, resulting in overstocking the inventory. For example, a business that overstocks on winter clothing will have little opportunity to sell these items after the season ends. Many times, these businesses will try to eliminate excess inventory by selling products at very low prices, which lowers profit margins. 
• Supply chain strain: Another challenge to navigate is supply chain strain. As businesses across the supply chain attempt to anticipate and meet demand, disruptions can occur in product transportation and prices for raw materials or services can spike, further impacting busy seasons. 

Adopting Seasonal Inventory Management Strategies

To overcome seasonal challenges and optimize your resource allocation and business growth, it is crucial to adopt effective inventory management strategies. Consider these trend management solutions:

• Seasonal demand forecasting: Demand forecasting is a powerful tool for navigating seasonal changes. Leveraging market trends, historical sales data, and similar tools and techniques can empower you to understand and respond to demand shifts accordingly to optimize revenue. 
• Flexible inventory systems: A flexible inventory system is crucial for adapting to seasonal demands. These systems can allow you to track inventory in real time, automate inventory management tasks, and place inventory adjustment requests to scale operations up or down as necessary. 
• Seasonal promotions and bundling: Implementing strategies like seasonal promotions and bundling can help you clear out seasonal stock. For example, offering a buy-one-get-one-free or half-off price for winter appeal can help reduce excess stock and make room for summer apparel.

The Role of Inventory Management Technology

Technology plays a significant part in scaling operations and meeting seasonal demand. For instance, quality inventory management software like NetSuite can empower real-time inventory tracking, demand forecasting and more. With reporting tools, inventory alerts, dynamic reorder points and seasonal average calculation capabilities, you can easily respond to and prepare for trends throughout the year. Additionally, these systems offer powerful data analytics, allowing you to leverage historical data to make informed decisions over time. To make the most out of your technology investment, look for these features:

• Real-time visibility: Quality systems allow you to monitor stock levels, making it easier to adjust inventory across locations and place orders accordingly. 
• Predictive analytics: These metrics are crucial for informing demand forecasting. Predictive analytics leverage historical data regarding seasonality, sales and other factors to determine optimal resource allocation.
• Automation: A robust system will utilize machine learning and artificial intelligence to streamline management tasks. For example, you can use these features to automate ordering and replenishment processes or optimize supply chain management. 
• Collaboration tools: Your technology should facilitate seamless collaboration between departments, stakeholders, suppliers, vendors and anyone else relating to your operations. Look for report sharing functions, access capabilities and similar tools to enhance collaboration. 

Simplify Keeping up With Demand With The Vested Group

Seasonal trends can impact inventory levels in monumental ways. Learning how to navigate these challenges and optimize your resources and decision-making processes is crucial for business growth and fostering exceptional customer experiences. 

Being proactive and adaptable in inventory management empowers you to navigate seasonal trends successfully. That's where we come in. At The Vested Group, we empower businesses with a tailored solution. As a qualified NetSuite provider, we enable businesses to make the most out of the platform while minimizing complexity and supporting implementation. 

With NetSuite, you can easily review and approve inventory adjustments and take control of your inventory levels. We also make it easy to enhance business flow with a range of custom solutions, including consolidated invoicing, asset rentals, vendor bill management, vendor approvals, related records and more. If you're ready to embrace seasonal trends and optimize your operations, contact our team.