Seasonal out-of-stocks: how to prepare back to school, Christmas and summer without emptying the shelves?

Why seasonal products run out

A seasonal product concentrates most of its yearly sales in a few weeks. Automatic ordering parameters, calculated on a yearly average, are wrong by construction during the peak (automatic ordering and out-of-stocks). And once the season is over, there is no catching up: the champagne not sold on 31 December waits for next year.

The ECR France 2013-2014 survey shows it in its ranking of the categories most often out of stock: champagne 13.6%, frozen seafood 9.8%, ice cream 9.5%, against a 5.7% average across all products. These are seasonal or festive products.

The three seasons that count

Season	Typical products	Traps
Back to school (late August, September)	stationery, school bags, lunchbox snacks, large-size toiletries	wide range, slow movers out of season, one-off orders placed early
Christmas (November, December)	sparkling wine, chocolates, festive fresh and frozen, toys, decorations	peak over a few days, saturated deliveries, products without a substitute
Summer (June to August)	ice cream, drinks, barbecue, sun cream, salads	weather dependence, velocity that doubles overnight

The method

1. Start from last year’s sales, week by week. For each seasonal SKU, sales in the same period the previous year, with the weeks of out-of-stock if known. A SKU that ran out in week 51 last year gets more this year.
2. Raise reorder points before the peak, not during it. On stationery, from mid-August; on Christmas, from mid-November; on summer, at the first warm week.
3. Order in several deliveries when logistics allow: a first delivery to launch the season, weekly top-ups adjusted to real sales. One big order clutters the back room and then runs out (organising the back room).
4. Count the season’s SKUs daily during the peak, as for a leaflet (leaflet and availability): ten minutes for fifty SKUs, at both locations (shelf and seasonal space).
5. Check deliveries by SKU on seasonal products: an incomplete Christmas pallet found on 20 December cannot be recovered (receiving and checking by SKU).
6. Note the season’s out-of-stocks for next year: the SKU, the week, the cause. It is the only way to improve step one the year after.

Summer and the weather

Summer products have one more cause of out-of-stock: the weather. A hot week doubles ice cream and drinks sales overnight, with no warning in last year’s sales. Three practices: follow the five-day forecast and place a top-up order as soon as a hot spell is announced; raise the reorder point of the twenty most sensitive SKUs all summer; accept moderate overstock on non-perishables (drinks) rather than the out-of-stock on the hottest Saturday.

A worked example (hypothetical)

Take a fictional supermarket preparing Christmas on 120 festive SKUs. The previous year it placed a single order in late November and saw out-of-stocks on 28 SKUs between 20 and 24 December, including champagne and frozen seafood. This year it orders in three deliveries (late November, 10 December, 17 December) with top-ups set on real sales, and counts the 120 SKUs every day from 15 December. The expected scenario is a clear fall in out-of-stocks in the last days, with no overstock on 26 December. The figures are illustrative.

What shopper reporting changes

During a seasonal peak, velocity changes hour by hour and the morning count is already out of date by the afternoon. Shoppers who report a missing festive product with ShelfAlert give the information when it is useful, and the store sees which seasonal SKUs come back most in the reports, for the next day’s top-up order. 14-day trial, no payment card: see the plan for store managers.

Sources

• ECR France, 2013-2014 out-of-stock survey by category, reported by Journal du Net: the products most often out of stock.
• Gruen, Corsten, Bharadwaj, “Retail Out-of-Stocks: A Worldwide Examination”, GMA, 2002: full study (PDF).
• ECR France / IRI out-of-stock barometer: LSA, out-of-stock rate.