With the main holiday season winding down, some retailers will take this next month to unwind and recoup from the consumer driven hysterics of the holiday spirit spending spree.
Unfortunately, those retailers aren’t doing themselves any favors. In fact, they’re setting themselves up for failure in the coming months. Smart retailers, including those in the fragrance industry, use the month of January to plan, prepare and restock their inventory for the next impending rush of consumer demand: Valentine’s Day.
In the fragrance industry especially, retailers need to start stocking their inventory of perfume gift sets for women in advance if they want to maximize their sales figures when the most romantic holiday of the year rolls around. American consumers spent a total of 19.7 billion dollars on Valentine’s Day in 20161, indicating that there’s more than a fair amount of profit to be earned for prepared retailers.
First, Some Much Needed Post Holiday Cleaning
Reassessing the state of your wholesale inventory can be difficult after it’s been subjected to the increased strain of holiday spending; digital product databases can be flooded with inaccurate information, physical warehouses and SKU systems can be in complete disarray and staff can be left scratching their heads when trying to project accurate figures to base future spending on.
There are some simple systems retailers can utilize to get a grip on their strained inventory and inventory management systems, such as:
- Spot Checking
- Digital Management Database Audits
- Assessing KPIs: Inventory Turnover, ROI and Carrying Costs
Spot checking is a method of inventory management that’s best worked into a more accurate or rigorous system of inventory overview. Spot checking is a random or quick check of inventory that goes against an established and accurate list, probing for inaccuracies in record keeping or storage procedure.
Carrying out spot checks frequently at random intervals, especially during busy seasons, can help maintain accuracy of inventory as it gets picked clean by consumer holiday spending.
In addition to spot checking your physical inventory, it pays to randomly audit your digital inventory management software as well. As your employees race to get products into the hands of consumers, record keeping errors will occur in spreadsheets and management software.
Frequent audits of digital numbers against physical counts can yield higher accuracy and allow for data-driven decisions when ordering inventory after a particularly busy seasonal sales period.
Beyond checking for human error, your database audit should include a review of certain key performance indicators (KPIs) including inventory turnover, ROI and carrying costs. Your inventory turnover metric is the amount of times your inventory is sold and replaced over a certain time period.2 This lets you know how your business is performing and prevents you from over ordering. Of course, ROI gives you your profit which is a critical metric for any viable business – and finally, carrying costs include an assessment of opportunity costs, storage costs, inventory service costs and inventory risk costs. Ideally, a retailer should keep their carrying costs at about 25% of their inventory value.2 To lower this number, you’ll want to start by reducing the size of your inventory.
Next, Forecast the Best Plan for Your Valentine’s Day Demand
In addition to keeping accurate track of inventory to make informed decisions about your fragrance wholesale order for Valentine’s Day, it also pays to do a bit of sales forecasting to better predict the numbers that will satisfy consumer demand.
By analyzing the products and gift sets that were popular during the past Valentine’s Day, it’s possible to establish which foundational products to purchase. In other words, products and fragrance gift sets that performed well with consumers in previous years for Valentine’s Day will most likely be successful in the upcoming year. Among the most popular women’s fragrance gift sets last year included:
- Dolce & Gabbana’s Light Blue
- Marc Jacobs Daisy
- Beautiful by Estee Lauder
It’s also useful to look at what products performed well in November and December of this year (the key time to purchase gifts for Hanukah and Christmas) and interpret how well they’ll perform for Valentine’s Day. It’s prudent to look at successful fragrances and perfume gift sets that sold well during these months because it allows an appropriate gap of time to pass for consumer demand to grow.
Gift sets or fragrances that consumers received as holiday gifts have an increased chance of being recommended to other consumers and thereby purchased as gifts when Valentine’s Day rolls around. It’s also wise to peruse the selection of upcoming Valentine’s Day exclusive releases and gift sets and forecast the consumer demand of the most promising offerings.
Despite the break a business may want to take after having their inventory bombarded by holiday season spending, the time to replenish their stock from fragrance wholesalers is now. By organizing your physical inventory and the digital systems that keep track of it, your business can better analyze the specifics of what you need to stock for Valentine’s Day.
Forecasting what fragrances and perfume gift sets will perform well by studying the top sellers in previous years and, from the passing holiday season, helps your business make informed decisions about which fragrances to purchase in preparation for the consumer demand associated with Valentine’s Day. By using these tips and stocking up for the upcoming holiday season now, your business will be positioned for prime profitability and client satisfaction this Valentine’s Day.