Shoot While the Ducks Are in the Air

The holiday shopping season is important to retailers, and its importance is growing. As the chart below from the National Retail Federation shows, there's a dramatic growth trend of holiday sales in total. Direct retailers (i.e., catalog and e-commerce), unconstrained by store walls, generally see even a greater percentage of their annual sales during the holiday period.

A September 2014 report by Deloitte forecasts overall holiday sales this year will increase between 4 percent and 4.5 percent, while nonstore sales will increase at a much higher rate, between 13.5 percent and 14 percent. Holiday sales can account for 30 percent or more of annual sales for a lot of retailers, with most transactions occurring in a four-week to six-week period. For many retailers, the importance of holiday sales and profits cannot be overstated.

Because of the magnitude of sales occurring in such a compressed time period, the quality of inventory planning is often the difference maker between average and outstanding holiday sales and profits.

Bill End, avid outdoorsman and former CEO at L.L.Bean and Lands’ End, would frequently say, "We've got to shoot while the ducks are in the air." He was explaining the importance of aggressively marketing while consumers were naturally shopping, but the same adage applies to inventory planning and decision making.

While there are many factors involved with successful holiday inventory planning, most of which would have been executed over the preceding 12 months or more, I want to focus on the most important inventory actions you can control in the next few weeks. As we've observed with our Direct Tech customers, now is the time to do the following:

1. Aggressively monitor inventory positions and forecasted end-of-year inventory levels by product. Know where you have inventory overages and shortages, and actively communicate that information to the rest of the company. You likely can't reorder inventory at this point, but you have a huge opportunity to aggressively market the inventory you own.