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Retail Christmas Stock Planning: How Much Should You Actually Buy? · The Resilient Retail Game Plan - retail insights, retail trends and best practices

• 0:00
  Make sure you listen to this episode before you buy
• 0:02
  anything else for Christmas.
• 0:04
  Now, I know I said I was going to do a four podcast series to help you get
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  ready for Christmas, but this is actually episode number five on the same theme
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  because I realized that there was one aspect that I didn't really delve into in
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  the other four that I wanted to make sure I went through with you today, and that
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  is getting your stock ready for Christmas.
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  Just before we get into today's episode, I wanted to remind
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  you that if you head over to resilientretailclub.com/christmas, you can
• 0:29
  get my freebie download all about getting ready for Christmas with a template
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  and a PDF guide, so don't miss out.
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  Welcome to the Resilient Retail Game Plan.
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  I'm Catherine Erdly, and this podcast is here to share retail industry
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  trends, insights, and best practices for you, the retailer who's serious
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  about building something that lasts.
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  So the Christmas buying season is well underway.
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  You may well have been to the trade shows, you may have placed many of your
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  orders, but there will still be things coming at you that are looking tempting.
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  You'll be hearing from your suppliers.
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  You may be seeing sales reps. You may have more shows that you're
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  going to see or just be receiving emails and catalogs constantly.
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  So the temptation to keep buying is really very strong, and it's easy
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  to keep buying when it's Christmas because Christmas is so important.
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  And there's always another gorgeous range, there's always another supplier,
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  and another thing that you're convinced is gonna be absolutely crucial.
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  But before you place any more Christmas orders, I want you to stop and ask, is
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  your stock actually ready for Christmas?
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  And more importantly, where are the genuine gaps?
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  Because the question I don't want you to ask is, how much
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  money have I got left to spend?
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  Because having 5,000 pounds, for example, available to spend
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  doesn't necessarily mean that you need 5,000 pounds worth of stock.
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  Your buying budget isn't a pot of money you're allowed to spend.
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  It should be based on the stock that you actually need.
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  So how do you figure out if your stock is ready for Christmas?
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  Well, if you go back to episode 316 where I talked about d- the first steps
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  that you needed to take to get ready for Christmas, a lot of this is the
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  same as the first steps that you need to take to start getting ready to figure
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  out if you've got the right stock.
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  You need to think about what happened last Christmas first.
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  Look at both your November and December sales and ask yourself what sold
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  brilliantly, what I sold out of, what did I wish I'd bought more of, what
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  do I have far too much of, and what was I still staring at in January?
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  You don't want to just look at your individual best sellers,
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  but you really want to break your business down into categories.
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  For me, one of the biggest issues that I see with small businesses and one of the
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  biggest pieces of work that we do in Stock Doctor when we're helping people really
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  clean their data and get ready to make better decisions from it, is we have to
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  get them to look at their business in a series of departments or product areas.
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  So for example, if you just look at your best sellers and it's a list
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  and it says that you sold six of this candle and seven of that candle and
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  three of that wax melt, it may mean that you're getting a lot of detail,
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  but you're missing the big picture.
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  You're missing the big categories within your business.
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  So everybody has probably around six to eight categories that it
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  would be really helpful if you could just look at those all together.
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  So for example, if you are a gift home lifestyle store, you might have
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  one category which is home fragrance.
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  You might have one which is kitchen and kitchen implements or kitchen accessories.
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  You might have one which is wellbeing.
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  You might have one which is clothing, one which is accessories,
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  and so on and so forth.
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  You're going to have these big blocks of product areas, and looking at
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  those as Individually is going to be what really helps you understand if
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  your stock is ready for Christmas.
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  If you've got 15 or 20 of them, then you may find that it's a bit too
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  granular, you- there's too much detail.
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  See if you can put some of them together.
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  For example, if you have got one which is bags, and one which is jewelry, and
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  one which is scarves, and one which is gloves, could you put all of those
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  together in an accessories category so that you end up with around six to
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  eight major product areas that, that you can use to examine your sales
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  and your stock at Christmastime?
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  Once you've worked out what your categories need to be, and this is useful
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  not just at Christmas, but all year round.
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  Again, a lot of the work that we do in Stock Doctor, my done-for-you stock
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  management service, is, uh, actually helping people understand what their
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  product classification should be, helping them come up with that structure so
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  that we can then start to analyze their business in a much more meaningful way.
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  But once you've done that piece of work yourself, then you can start having a
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  look at your sales mix and your stock mix.
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  So what I mean by that is, is if you look back at your November and
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  December sales from last year, you might discover that, let's say jewelry
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  is a major part of your business.
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  Let's say your jewelry category was 40% of your sales from November and December.
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  And if you now look at the amount of stock that you've got and realize that
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  only 10% of your stock is jewelry, that's a really good indicator
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  that something is out of line.
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  Because when we look at stock mixes and sales mixes, ultimately what
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  we would want to see is that your sales mix is matched by your stock.
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  So for example, if you have 40% of your sales coming from
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  jewelry, then 40% of your stock should also be sitting in jewelry.
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  Because ultimately, when we're looking at sales and stock mixes like that, what
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  we're trying to do is balance it back so that your overall stock is in line
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  with what your sales are expected to be.
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  Now of course, this isn't a perfect science.
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  There will be things that shift, but we're talking about making
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  sure that you're not really missing anything blindingly obvious.
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  So for example, let's say you do this analysis and 10% of your sales in November
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  and December came from homewares, but half of your stock is currently homewares.
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  Now that is something that you need to take into consideration, do some
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  research into, maybe clear some of your homeware stock out, or maybe just commit
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  to not buying any more homewares as you go into the Christmas time period.
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  So last Christmas doesn't dictate what will happen this Christmas,
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  but it's a much better starting point than gut instinct or just
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  not looking at this at all.
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  So then again, as I touched on in episode 316, you want to have a think
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  about what your total sales are going to be over the Christmas time period.
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  You take a look at last year's number and then sense check it against what
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  is happening in your business now.
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  Are you currently trading down or up versus the year?
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  Has anything significant changed in your business?
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  Do you have a new shop, a new website, a bigger or a smaller customer base?
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  Do you have new categories that you've brought in?
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  Y- are you doing more marketing than before or less marketing?
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  Was last Christmas unusually good or unusually bad?
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  For example, last year did you have scaffolding outside your shop, and this
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  year that has now been cleared away?
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  So you might expect that your footfall and your sales are better than the
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  last Christmas Come up then with a realistic Christmas target number.
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  not your dream number, but something that is realistic.
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  And definitely don't overestimate this number too extreme, because otherwise
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  you will end up buying too much stock.
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  And now you can have a look as well at your sales mix by category, and not
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  just look at one lump sum between the months of November and December, for
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  example, but actually looking at, okay, if I sold my s- categories in this mix
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  last year, and I can assume roughly the same mix this year, this is what I
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  think I'm gonna be selling by category.
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  The next element that you need to think about, which a lot of people
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  miss, is not just how much you think you're gonna sell during Christmas,
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  but what do you want to have left at the end of the Christmas time period.
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  So in other words, what do you want your stock position to look
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  like on the 31st of December?
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  You're not obviously going to try and sell everything in the business by New Year's
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  Eve, but you generally want to be aware of what your first quarter sales mix is
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  also going to look like, so you can end the year in a good position to start that.
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  So you want to be heavy on your evergreen product, things that you know are going
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  to keep selling in January, the core lines that you regularly replenish.
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  And generally speaking, most people, if they follow this traditional retail
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  timeline or seasonality, they will have low sales in January and February.
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  So you want to start January and February with less stock so that you're not sitting
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  on all of this stock and all of your cash tied up as you go into the new year.
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  So when you're working out how much stock you should buy for Christmas, it's
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  really important for you to consider what you want your stock position to be
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  when you come out of the festive season.
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  You also want to be aware of the products that you don't want to be sitting on.
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  So that is things like your heavily seasonal Christmas products, any
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  products that you already know you want to move away from, you want to
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  replace, you want to offer new ones.
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  basically anything that is not really going to sell during that
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  first quarter in the springtime.
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  That is the product that you want to be super cautious with and not overbuy
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  to put yourself with a better chance of being in a good stock position at
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  the end of Christmas You can, in more general terms, ask yourself, "Do I want
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  to enter 2027 with more stock than I have now, roughly the same amount, or less?"
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  For a lot of retailers, the answer will be less.
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  Stock isn't just stuff sitting on shelves, it's cash.
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  So Christmas success isn't just about your November and December sales numbers,
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  it's about how cleanly and profitably you come out the other side without
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  storing up a whole load of problems that you have to then carry into 2027.
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  So the calculation that you need to do, and again, this is what the Stock
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  Doctors do for our clients within the Stock Doctor service, is working out
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  what we refer to as a balance back, and that is looking at what you actually
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  need The calculation is effectively what you need to buy for Christmas is what
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  you expect to sell, plus what you want to have left, minus what you've already
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  got and what you've already ordered.
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  That difference is the amount that you still need to buy.
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  I'm gonna give you an example, and I'm gonna run it through at cost value
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  because we're calculating a buying budget.
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  So let's go back and imagine that we're talking about jewelry
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  that I mentioned earlier.
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  So let's say you've done your calculations, and at cost you expect
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  to sell over November and December about £10,000 worth of stock.
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  And at the end of the year, you know that you want to be pretty lean on your
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  jewelry stock because there isn't a big market for it in January, February, March,
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  or as much as there is at Christmas.
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  So you want to be quite tight on your stock going into the new year.
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  So let's say your desired closing stock at cost was £3,000 and you currently
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  are sitting on £6,000 worth of stock.
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  You've also already placed £2,000 worth of orders from your suppliers
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  to support your Christmas sales.
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  So you've already got £2,000 worth of stock on its way.
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  So if you look at that, you've got £6,000, you've got £2,000 more
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  coming, that gives you £8,000.
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  You're gonna sell £10,000 worth, so that would put you into negative two.
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  You want to be left with three, so that difference between those
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  two is that you've got £5,000 at cost that you would want to buy.
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  So therefore, that £5,000 is your buying budget, not because you happen to have
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  £5,000 sitting in your account, but because that's the gap in your stock plan.
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  And this becomes even more useful when you do it by category.
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  So you might discover, for example, that you've got £5,000 left
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  to buy jewelry, gifts, £3,000.
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  Home, actually when you do your analysis, you've got all the stock that you need.
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  You don't need to buy any more.
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  And accessories, you're already maybe £2,000 over where you need to be.
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  So you can see already that then you've got choices to make.
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  Do you then really try and push through that accessories stock?
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  You're aware that you're over or, or you're heavy.
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  You're gonna then stop buying any more home because that is where
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  you have already got enough.
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  And then you're gonna be on the lookout for some new jewelry so that
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  you don't miss out on that sales opportunity And so as you can see,
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  just doing those calculations means that your buying becomes strategic
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  rather than opportunistic, and you're able to be more focused as
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  opposed to being pulled in direction.
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  Now, all of this I'd like to just put a slight caveat on, because one of the
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  things that I get asked a lot is how do you work out how much of your Christmas
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  stock should be things that you feel really confident about versus things that
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  you're wanting to try for the first time.
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  And I think generally speaking, if you can make sure that the bulk of your
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  stock is things that you feel really confident about, proven bestsellers,
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  core lines that you know that you're gonna sell throughout Christmas,
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  things that you've sold previously.
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  If let's say 80% of your stock is sitting in that category, you can afford to
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  be a little bit more playful, a little bit more reactive, a little bit more
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  experimental with the remaining 20%.
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  But looking at it like this and looking at the different categories, it doesn't
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  mean that if you see the most amazing homeware item that you just think, "Oh
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  my goodness, that would be so perfect," doesn't mean that you can't try that.
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  Maybe put a little tiny bit of budget behind it.
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  But it will just steer you that you shouldn't be out there buying a load
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  of homewares if you've actually already got enough homeware stock to get
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  you through Christmas So what do you do if you don't have these numbers?
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  If you don't have access to this kind of data, if you can't easily pull
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  last year's or y- you're struggling to really get your hands on it, then
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  you can do a simplified version.
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  Even if you don't have all of the data, you can still take
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  a look at doing a sense check.
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  Go through your categories.
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  Now, even if you haven't got them all perfectly assigned on your system, you
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  can still roughly think about, look at your shop, look at your website, look
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  at your business, think about, right, what are the key categories for me?
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  Go through them one by one, and then just mark them to yourself.
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  Okay, if I'm really honest with myself, do I think this is understocked?
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  Do I think this is about right?
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  Do I think this is overstocked?
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  Think about where your Christmas sales have come from.
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  You can get yourself a certain amount of the way there by asking, does the
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  stock I've got broadly reflect where I expect the sales to be coming from?
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  Now, of course, it is much better if you can get the actual data
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  because you may be surprised.
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  Some people will swear blind that something is their biggest category,
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  but when they pull the numbers, they realize that's not the case.
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  So it's always worth doing it if you've got the data.
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  But if you really can't get the data, it's still worth you asking yourself,
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  instead of, do I like this item, does it fit into my Christmas buying strategy?
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  Is it going to help me meet my sales goals?
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  And if you realize that you don't know the information at all, then
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  that's also useful information for you to have about your business.
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  Definitely see what you can do to get those numbers, to get some kind
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  of direction before you spend any more significant amounts of money.
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  So before you place your next order then, ask yourself,
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  does this fill a genuine gap?
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  Is this a category that drives my Christmas sales?
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  Am I already carrying enough of this type of product?
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  What have I already got coming in?
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  If you don't have yourself an order tracker, I really highly recommend
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  that you get yourself into the routine of noting down all of the orders
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  that you place into a spreadsheet so you can easily see how much you've
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  ordered and what type of product it is.
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  When will I have to pay for this?
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  We've talked about the Christmas cash flow crunch, so be really aware of that.
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  Can I reorder it if it sells quickly?
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  What happens if it doesn't sell?
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  Is it gonna cause me a problem in January?
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  Or actually, is this something that I can be quite relaxed going into January
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  with because I know it will sell?
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  it's really important to think about things like your reorderability because
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  even if you see something that you really like, you should maybe, if you can
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  possibly reorder it again in the Christmas timeframe, go really tight on your initial
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  buy so that you're not over-committing and you're not left with something
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  that you're not sure is going to sell.
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  don't confuse the feeling of I love this product with my
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  business needs this product.
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  I know it's really difficult.
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  I know that you may well have started your business because you
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  love the product sourcing element.
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  I see it all the time, and I totally get how seductive it can be to see a
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  really fun product and think, "Right, this is the one thing that's gonna
• 16:22
  make the difference to the sales."
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  But I can tell you from 26 years of experience in the retail industry, the
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  thing that will help you with your profit the most is to really be strategic with
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  what you're spending your money on.
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  So before you buy another thing for Christmas, take a look at last year, set
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  yourself a realistic sales target, decide what you want left at the end of December,
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  look at what you've already got and what's coming, identify those gaps, and then buy.
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  So don't forget, you're not just about spending money that you've got available.
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  You want to make sure that the money is being spent on where there are
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  gaps between what you want your stock to be or you need your stock to be
• 16:59
  to do the sales that you want to do and where your stock currently is.
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  This Christmas, it's not about setting out to fill up your stockroom, it's
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  about setting out to fill up the gaps in your product or assortment.
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  Thank you so much for listening.
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  Don't forget, you can head over to resilientretailclub.com/christmas and get
• 17:18
  your free Get Ready for Christmas guide.
• 17:20
  And of course, if you have a moment to like, follow, or subscribe this
• 17:23
  podcast wherever you listen to your podcasts, you'll be the n- first
• 17:27
  to know about each new episode that comes out every Thursday morning.
• 17:30
  See you next week.