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Martin Kleindl | 27 December 2017

How to manage stock replenishment in your electronics stores during yearly peak periods

How to manage stock replenishment in your electronics stores during yearly peak periods
Stock replenishment in electronics stores can be a complex issue. Take seasonality, for example: it’s an important factor to consider, but not all products are affected in the same way. So-called brown goods, such as smartphones, audio equipment, tablets and laptops, can experience big sales fluctuations, depending on the period of the year. On the other hand, white goods, such as washing machines, fridges and other large home appliances, tend not to follow seasonal patterns. During specific yearly sales peaks in particular, careful planning is required in order to have enough stock to meet customer demand, without having too many items left over afterwards. Here are five key peak times that take place throughout the year, with our advice on how to be prepared when it comes to planning the optimal item selection and availability.

Back-to-school season

Consumer behavior has changed considerably in the past few years when it comes to school necessities. A few years ago, notebooks, pens and a backpack were all students needed; today, tablets and laptops have become school essentials. According to a Deloitte study, 14 percent of back-to-school spending in the US is now dedicated to hardware and computers alone. This is not the only change that is taking place. People are also beginning their back-to-school shopping earlier and earlier, and consumer electronics is the item category whose sales spikes first – often still in July! Be ready for the season by stocking up on tablets, laptops, USB drives and accessories like cables and laptop bags early in the summer, and don’t forget to promote them with back-to-school deals, students’ offers and advertising early in the season.

Summer holidays

Summer means vacation time for many people, which leads to increased demand for items that can complement a holiday. Stock up on digital (and action) cameras, waterproof speakers, and camping essentials such as grills, battery-powered lamps and portable coolers. Be, however, mindful of weather variations. A couple of years ago, an unseasonably hot late spring and early summer meant that all retailers in my area were out of electric fans. If just one of them had thought to use weather forecasts to plan their inventory buying, that retailer could have had a very satisfactory season (and maybe gained some new long-term customers). The lesson? Don’t simply base your purchase plans on previous years’ sales history. Take into account external data such as weather information, and remember to factor in the concurrence of sporting events or festivities. Even if summer comes every year, you can’t always rely on the same replenishment strategy.

Sporting events

Big sporting events can lead to a boost in sales for specific electronics items, such as large TV screens, display panels for smartphones, and hi-fi audio systems. This is known in the business as the “World Cup effect”. However, research shows that the buying frenzy generated by these events usually does not grow sales, but simply moves them from one season to another. When planning your inventory around sporting events, do not overestimate the increase in sales, and be aware that during the months following the sport event, sales may not match previous years. Market research firm GfK urges retailers to do what they can to maximize their share of sales in the weeks leading up to the event. If you miss out, they warn, “it will be difficult to catch up afterwards” - and you don’t want to risk being left with a lot of overstock once consumer interest has petered out.

Product releases

Product launches can be times for record sales of electronics. Always keep track of industry announcements, and make sure you are well stocked when the release day comes. At the same time, keep in mind that demand for new products peaks quickly, and as soon as a newer model of the item is released, the previous one will rapidly become obsolete, and very hard to sell at full price. Use your replenishment system to plan the right amount of items to order, combining a real-time view of your stock with insight into sales history, influences and demand projections.

Winter holiday season

The winter holiday period is a key time for sales: there are retailers that reportedly generate 80 percent of their annual profits in the days between Black Friday and early January! As more and more shoppers gather gift ideas in-store long before the holiday season (according to NRF data, last year more than half of holiday shoppers started researching purchases in October or earlier), make sure you have all the displays set up in-store well ahead of time. Even with good preparation, managing the winter holiday supply chain can be complex, and requires the combined use of long-term forecasting before the season (which is relatively easy for products with a sales history, but not so easy for new items), alongside automated replenishment of popular items (based on actual sales) during the holiday period. Although you can’t completely avoid excess stock, a good way to limit your losses is to offer small discounts on products that you over-ordered early on in the season. You will drive up demand for the rest of the season, and will be left with less excess stock come post-holiday time.   When preparing for a new year, make sure to mark all key dates in a retail calendar, and look at the sales history of your products well in advance of any important date. Even though the sales managers’ expertise is key in determining the right quantities to order, a replenishment system – with automations – is indispensable, especially when there is a high number of products involved. During this process, an automatic replenishment system will be an indispensable ally in making sure that you have all the products need – but not too much of them. As Martin Kleindl, expert in replenishment at LS Retail, explains: “An item’s demand level can change dramatically during an item’s lifecycle, and is affected by seasons, events and promotional periods. A good replenishment system will enable you to create sales plans for each season, event and promotion. These plans, combined with information on current stock, demand and replenishment parameters, are the basis for accurate purchase orders and transfer orders to replenish your stores and warehouses. A software offering automated replenishment is key to having the right items in the right place at the right time during that all-important sales period.”

Don’t ignore the red flags of stock-outs and overstock
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