Xmas Retail Strategies: How to Tackle Inventory Woes During Holiday Rush

good afternoon everyone and Welcome to our webinar today we are going to be discussing about Christmas retail strategies and basically everything that is associated with a Christmas rush during the retail we know it's a little bit early and Christmas is not here yet but at the same time based on our experience we know that the preparation for the Christmas starts way way before the date and requires a number of steps that have to take place so my name is Andy and I'm sales team lit at Leia Ai and also today is joining me Helen com Helen hi my name is Helen com and I'm the product director of Leia inventory optimization solution thank you very much for having me here pleasure to have you here today hen so during the today webinar I will quickly introduce our company so Lio AI is National company already been on the market for the 15 years during this time we have implemented more than 200 projects in 30

countries and all our customers are supported by our 120 employees which are located worldwide but also in our two principal offices in United States and Estonia generally speaking we specialize in the solutions that are dedicated specifically for supply chain operations in retail management and that's where the experience for this webinar comes from so during the today we will discuss uh we will discuss first of all the key challenges that retailers face during the Christmas so again some of the hints what should you potentially look out for after that of course we will have decide on checklist what can we check review to prepare for to prepare your inventories for the Christmas rush and of course then we will show how it can be solved if you take the retail platform if we have those process in a digital environment and we digitalize our processes where possible and of course

to finalize on uh to finalize on the presentation we will also discuss some useful hints that could be useful for you even now when preparation for the upcoming period uh so uh if we ready to start uh then let's go and start speaking about those challenges by itself so as we all know Christmas is indeed a celebration remote celebration environment but if we are comparing among different Industries retail is the industry that suffers from the highest spike in demand and of course highest increase in workload and of course as a matter of fact such uh their number of consequences they have and they have to prepare for because we understand that again the goods that we are selling are highly seasonal and majority of the goods are highly seasonal of course increas is the period where the seasonality kicks in and one of the biggest challenges and the challenges that can really uh deteriorate our operations if of course it's not only we

are the ones who are overloaded but so are our suppliers it's not only our shops and not only our chain who makes double or triple orders during such period but also all other chains with who our suppliers are are uh cooperating so of course the risk of supplier failing us not being able to deliver the requested uh quantity is also very very large and we have to work for it and of course we understand that that would highly depend on how seasonal is the particular product that our suppliers are providing but to give you an idea for most extreme examples if something to do with technology if something to do with toy retailers something to do which is heavily associated with Christmas presents then we understand that in a month's time the sales can equal uh to the total Sal sales of that particular company within the whole year or within the remaining 11 months so of course some preparation needs to be done in order to ensure that our suppliers can be delivered and we can ensure

sufficient Goods during this seasonal period another very important uh challenge that number of category managers are facing is actually how can we identify which items are specifically going to grow so we can definitely understand that out of my categories let's say champagne will it growing sales during uh during Christmas most definitely in vast majority of the world people are celebrating Christmas and drinking champagne but the question is which are the particular items out of all our assortment that are going to grow and that are going to grow the most again so it's very important not only identify as a category by itself but also specific SKS and items that are there at the same time when we are speaking about the Christmas rush we understand that the logistics of the Christmas can be significantly higher and basically to do with significantly

increased number of operation so if we are known that within a period of a months we are going to be selling extreme like significantly more product then we also need to understand that we might require a significantly more storage in our warehouse in order to able to support such operations we also might require a significantly higher capacity for our Fleet whether we have our own Fleet whether it's an Outsource we still need to ensure that our service provider is capable to deliver on the increased Demand on the increased Spike and the same case if it's our own so if for instance we required for one location three or routs before then we might require a significantly higher quantity unfortun challenges are not uh finished and there are a number of others that are happening one of the things we understand that we work in a very Dynamic world and something that we've been selling a year ago it's might

not still be relevant today we might not be selling those items and for instance we can understand that because of the changes in the assortment for instance we don't have a last year information about how did those products performed during the Christmas period and of course that's an additional sale that's an addition challenge because without that kind of history of how did the product perform during this period I very difficult to identify how it will be performing during this year again could be caused by another issue you might be certain that you haven't changed that much of a product but what if your supplier supplier fails you and you have to in a very Force Major manner to add an additional s to your assortment list and of course this is a challenge how are you going to forecast it and how are you going to predict its behavior during the rush also very important to understand that there are number of factors that are influencing uh the demand for the product during this uh during this time

first of all of course it's a seasonal demand people are buying presents people are preparation but we don't really cannot forget about the fierce competition that's coming and apart from uh overall associations of Christmas with more shopping there are a number number and number of promotions that are going to be run by your competitors and are going to be run for you and again it's very important to understand that those different factors can have a different effect and for instance if we had a different conditions on our promotions during the last uh Christmas during the last year then of course that forecast might not be applicable and that forecast might be wrong because maybe promotional conditions have changed and we need to ensure that we adjust both factors that are influencing our demand in accordance at the same time another very interesting challenge that one of the customers share is of course additional layout of the goods when we go uh to

shop on the Christmas we like to go to the nice larger Supermarket some of the larger type of stores and we all like uh layout that they make a Christmas tree out of bottles of champagne or some candles or another basically a very festive type of layouts that help us get into the modood faster and of course uh probably increase the share of the purchases that we were planning to do but it's again it's very important to understand that first of all that additional layouts of goods do require additional inventories and if you don't have any additional inventories we won't be able to make those additional layouts it's also very important to have a very smart tactic towards it because if you create a number number of additional layouts which won't correspond to your expected sales which won't correspond to your expected sales reals it implies that at the end of this period you might have a huge amount of the goods which you didn't sell when planned but you

still have to sell it and of course it will result in excessive Frozen capital and as a result detated financial performance also uh another challenge which our customers uh share us is that approach for the different store formats also should be different because number of customers and majority of the retailers they are working with different format they working again the format would be depending on where the customer leaves what does a customer like demographics of the customer and what are his shopping habits and if we look at the groceries we can help for instance supermarket and convenience store but we understand that in terms of the assortment and prepar ation for the Christmas it would be very different because if I go to the supermarket during the Christmas period it implies I'm preparing for a family meal for a festive celebration and I'm buying everything as many products as possible to make sure that every uncle and every

aunt is having their favorite dish and we are having this uh this mood but if I understood that I forgot some really important uh ingredients and I understood that you know my nephew's my nephew's meal is not going to be ready or some kind of other first measure I'm not going to go all the way back to the supermarket which is going to have a huge use I'm actually going to go to the convenience store and ask for the specific ingredients so again it's very important to identify between different formats what are the products going to be in demand during the Christmas period depending whether it's a larger format smaller format and who those formats are designated for and what is going to be the reason for them to be coming over also it's a very important to plan and allocate workload in logistics purchases and operational stuff well we discussed that again there might be a limitation in terms of capacity for our

storage there might be limitation in terms of capacity of our Fleet but we cannot forget that there also could be limitation in capacity in terms of our staff if uh for instance we receive three times as many Goods during this period do we have enough capacity on the store level to collect these Goods to Shell those goods accordingly to receive those goods do we have enough drivers even if you have enough Fleet do we have enough drivers to bring those goods from the warehouse to the store again do we have enough people in the warehouse that would be able to distribute on this schedule so again ensuring that there is going to be sufficient capacity beforehand is extremely important and last but definitely not least and unfortunately we hear more and more stories on the regular basis of what is happening during the Christmas rush because of course if you're selling three times more and you're not too much expanding in terms of your capacities it implies you're going to dedicate

probably less attention and uh less effort to some of the things and of course uh as a result of some manual operations as a result of some miscommunications big force meor can Ure and it's important to be able to quickly adjust and change to the force measure situation uh for instance we work with one of the customers where is much specialized in uh alcohol drinks and different types of wine and one of the interesting stories they told us because initially they had a manual process of ordering one of the managers instead of 30 bottles of the most expensive wine which they predicted to be sold During the period and we are speaking about extremely expensive which goes like in hundreds hundreds of dollars he ordered 300 bottles which of course just in one operation one click has created a significant and significant over stocks for the customer and of course now they need to understand what to do to negotiate with a supplier to take some part of the assortment or maybe change

you know some of the assortment and try to promote more but the important part is of course Force majors are going to happen and you need to be ready and you need to be ready to adjust for them so uh those are the key challenges that our retailers are facing and those are very common among the retailers uh that we have and right now I will pass the floor to Helen who will actually discuss how to resolve them yes thank you Andy very much so and now we are going to discuss uh the checklist uh basically it is stepbystep plan uh that is based on our experience with uh dozens of our customers uh and uh we definitely understand how uh difficult it is to plan and to prepare for the upcoming holidays uh and especially if considering Christmas like is a huge holiday for all the verticals of the retail business uh as of course we were

like uh in the first part we were very focused on uh the issues that are connected with the grocery retail but despite that all the protocols they are struggling with some um issues that are connected with the increas in demand and the upcoming uh promotional activities that are uh increasing as well during that period of time so the main challenge here is to prepare the balanced quantity for uh the last two days or weeks some period of time that is that can be specific depending on the retail vertical and depending on the store format so um for the supermarkets for larger formats of course uh you need to be prepared a little bit in advance if to compare it with the c stores or some smaller formats so in order to achieve uh the great result in terms of the predictive um preparation of the this

Balan quantity we have prepare the checklist and uh in the end of our webinar you uh will have an opportunity to receive this checklist on your email if you will um if you will want to to receive it of course so uh the first step is to identify the list of the items that will definitely increase in sales so um based on our experience it is it can be rather hard because uh usually the periods of time when we are having the um seasonal spikes at the same time we are having the promotional spikes and and if you don't have the strict um system that will definitely identify and will distinguish the seasonal sales so the sales that are that are connected with this specific period of time and the promotional sales it will be very extremely hard to uh make the forecasting for the upcoming period uh that is why in Lea inventory

optimization solution our machine learning model is identifying this uh sales automatically and is is identifying the SKU and even SKU locations that will definitely have this increase in sales uh it is obvious that for the category of champagne or alcohol drinks in Europe for example um in the category of um um some uh let's say cans that uh can be uh also used uh and consumed during the Christmas holidays uh there is a list of categories that are not so obvious in terms of their increase in sales for example their how house cold houseold chemicals are increasing significantly uh during the Christmas holidays because people are preparing their homes to holidays or they want to make them uh clean after the all the

celebrations are are already done so uh this step is uh very very important because starting from that point uh we are identifying which exact skus need the increased uh forecast and needs to be ordered in the increased quantity uh the next step is to decide where the increased quantity need to be stored before the start of the sales Spike so and I was mentioning that depending on um the store format there can be increase or even decrease in sales during some uh holiday spikes but at the same time it really depends on the uh capacity of the um supply chain let's say uh and the structure of the supply chain So currently we have a customer who has four different levels in their supply chain uh and uh they need to definitely understand where exactly on which level of the uh central warehouse distributional Central

Regional Warehouse of stores this increased quantity will be stored due to to The Limited capacity of each and every level of the supply chain uh usually it is done uh by Logistics that uh based on the projected uh or last year's uh results uh they are deciding uh which exact skus will be stored on each uh level of the supply chain uh the thir step is to make a queue or a schedule of items uh in order to be delivered to the distributional center of stores usually it is done by categories so the uh schedule uh is done together the logistics with the category managers as Andy mentioned and it is very important that um not only uh you have increas in sales but all the retail in uh like your competitors in your sphere all or not

even competitors but all the retail has some increase in demand that is why it is the very loaded period for the suppliers and vendors that is why uh it is very important to prepare for this period in advance and this Quee or schedule really helps our customers to understand when exactly are we going to uh receive this or that category this or that items this or that suppliers and vendors on the level of the storage locations nevertheless it is the distributional center or the store uh the fourth point is to identify the new s that are predicted to increase in sales it is a very tricky Point as uh we don't have the historical data for the new esuse that is why in Leo inventory optimization solution we have four different strategies how to work with the new asuse and how to predict their increase in sales based on the um

their category role first of all uh because it is a very big difference whether this new SK is a substitute of the existing one or it is just a new SKU in the existing category and we need to align these sales and the and the overall sales of the category uh usually we use the cluster analysis for these projections so uh this is done uh automatically with the help of Le inventor optimization solution but at the same time uh due to the high percentage of the item rotation we definitely understand that without any kind of automation it is extremely hard to uh make the proper calculations for the new esus for the new introduced introduced items uh the fifth step is to calculate the forecasted increase uh demand and divide it into the parts according to the recommendation in the point number three so definitely uh when we are uh um

creating this queue or a schedule uh we need to understand that for example we are planning to receive not the whole batch of Coca-Cola or sparkling wine or whiskey or Pineapples uh once since we need to understand that we are forecasting to have 70% of this batch uh of sparkling wine by 11th of November and 30% by EVS of November to ensure that we definitely have this quantity in place uh we definitely have the necessary uh items uh due to the foric asset increased demand but at the same time uh we are dividing these deliveries into batches uh not to overwhelm the logistics capacities of the supplier and at the same time of the internal supply chain and the Define to define the order dates for storage and warehouses uh to

have the deliveries according to the identified queue or schedules so it is usually done when we have the full list of these deliveries when we understand that we are having uh for example 100 deliveries for the increased uh increased demand for the categories that are having the increased demand and um you need to plan how the logistics would be done and by which uh date or uh the order need to be generated to ensure that the delivery date will be in terms of some specific period of time uh it is done also automatically by our solution uh it is calculated based on the projected date when this quantity needs to be um on the storage location on the store uh level or on the distributional center and the system based on the supplier schedule will calculate the

particular order date and will calculate the increased order quantities to ensure that it will actually happen the next point that after receiving the increased stock it is very important to proceed with the regular orders uh from one point of view it is extremely obvious but uh at the same time as we are having thousands of skus and in terms of SKU locations it can be even millions of SKU locations uh it is very hard to keep track of the each and every SKU if it is not done automatically so sometimes it can happen that without uh the necessary level of automation or without the system that is not considering these specific points it can be an option that for example you have prepared in advance everything was calculated properly and the deliveries were done timely and everything like works very smoothly but at the same time this increased quantity started to be um

so like start the this quantity is sold during the uh period of time prior the beginning of the um specific seasonal period uh and of course it influences everything and by the beginning of the seasonal spikes it can be a situation or a case where you don't have enough uh quantity to uh cover the demand so uh it is extremely important to ensure uh that uh you are proceeding with the regular orders especially when you are preparing in couple of months in advance it is necessary to identify the end date of the demand Spike yes of course it is because uh uh it is important for the system to understand when exactly do do we need to um return to the uh normal let's say

regular sales uh based on um some historical data usually it is done automatically sometimes it can be done manually when especially when we don't have enough historical data and unfortunately it happens uh all the way along and very important to analyze the efficiency of all actions by the uh end of The increased sales uh to prepare better for the next seasonal spikes of demand uh to continuously improve uh this process um this is like our recommendation for all the huge holidays activities promotional activities uh gender holidays and Etc so it is great when there is a place uh and time to sit together with all the Departments that are involved in the preparation starting with the logistics and uh commercial Department ending with uh the operational Department marketing so

everybody who is involved in this process and to understand what went wrong uh and not to find who is responsible for that but to understand how the process can be improved in order for the future to um be better to be better in terms of the preparation and uh overall um success uh in in terms of the uh seasonal sales uh I have found an interesting example that uh that is an illustration to the situation when we something is not aligned uh in terms of the preparation so it is an example of the atin routini where uh we did have as Andy mentioned this increased layout during the holiday period but the sales are not so high uh so the holiday period ended but unfortunately the layout uh

the additional layout was so huge the um Gray Zone here is identifying the size of the layout so it was extremely huge probably it was negotiated with the suppliers uh but afterwards uh we remain with a very high level of the quantity on hand and of course it influenced the inventory turnover and the cost of inventories in general uh and is leading to uh the Frozen Capital issues that are not um um helping us to develop either the assortment range or to develop the retail chain in general uh just a second I will uh in a few moments I will demonstrate how we are making a it happening in the solution itself so um first of all we have the so-called abnormal demand days

which is the pling calendar uh where we have the identification of some holiday periods for example here we have the gender holiday the St Valentine's Day Thanksgiving Day and of course the preparation uh for Christmas itself it helps the system to first of all to understand the particular dat and secondly to uh for such kind of holidays like Easter that are not happening during the same period of time so we have the variable dates each and every year the system is able to identify in that this particular period of time last year and the the year before last year was happening not at the same time of the year and to in order to calculate the forecast uh the machine learning model of Leo inventory optimization solution is using different slightly different periods of time and slightly different assortment range that was increased in sales during the

preparation for the holidays um one more thing uh I'm sorry one more thing I wanted to share is the um holiday delivery Le so it is a special functionality in Le inventory optimization solution that basically helps to to make all these plans and Logistics uh and to divide all the um esus into the deliveries uh with the help of the very intuitive solution so uh as an example we have the sparkling wine preparation and you can see that the same category is divided into three deliveries by 11 18th and 12th of December 2024 and here uh we we have identified that we are expecting to have 20% of the expected increased Demand by 11th of December and uh there is a number of

settings it is very easy to make the settings happening so basically the percentages the dates and of course adding the particular sparkling wine asuse into the um into the table with the products to ensure that um all the necessary skus will increase in demand um going back and pretty the same logic with uh whiskey so uh there is a range of settings that need to be set to ensure that uh uh we are prepared properly but in general the level of automation is very high here and uh the last but not the least uh um the general understanding how and when exactly are we going to prepare for the uh Christmas holidays and at the same time uh which

promotional activities will take place at the same time so it can happen that we have the situation when the promotional activities and the preparation for the Christmas holiday or gender holidays or Easter are over overlapping between the same esus uh uh the system uh is calculating the demand forecast in this case uh totally automatically without any human intervention but demand planner or Supply planner usually wants to understand what is going on with all type of activities we are preparing for that is why we have created so-called promotional calendar that uh can uh show which uh types of the promotional activities are Reg going to have and at the same time which type of other activities are we going to have so here we have the overlapping between the uh different types of promotional

activities uh and one more uh important Point here that of course the system so today's our today's topic is the preparation for the Christmas holidays but of course the system has a functionality to calculate the promotional demand forecast it is done also by the machine learning model and uh the forecasting accuracy uh is rather High uh based on the fact that we are using uh a huge variety of different factors um that are connected with the upcoming promotional activities and going back to our presentation just a couple of useful hints uh that can help you uh in uh uh this year's preparation for the holidays so uh the increased the increased quantity must stay untouched so it was one of the last Point uh uh from the

checklist so till the beginning of the seasonal sales uh it need to be considered by the outter replenishment system it can seem obvious but believe us it is not so obvious and we have a lot of uh cases with our customers despite the fact they have very high level of automation they have the out ordering system and everything like worked properly this was a blind Point uh in their processes uh the process is fundamental so before starting any kind of preparation you need to see the process so to uh identify the cues to see how it will be working on which exact levels of the supply chain if you have some uh and so on so process is fundamental and in this process of course uh it is fundamental as well so the promotional forecast might be calculated separately from seasonal projection and then

multiplied so um if you're calculating it manually you definitely need to consider that we are having seasonal Spike and at the same time we're having the promotional Spike so it need to be considered if you have it automated like uh with our solution uh you do do not need to do anything here the system will do everything for you uh all calculations must be done using storage uh stor storage capacity as a basis so definitely uh not to prevent the situation of the collapse on the storage locations you you need to know uh how much space do you have in terms of all the storage locations um not to uh have the situation when there is no place especially when it's cold and uh um you cannot store some products outside and you don't have the backro so it it can be a problem the suppliers holiday

should be considered during the order calculation so uh it is a very frequent situation that after the end of the spike of demand some uh suppliers and vendors are having their own holidays and they are not able to receive and to deliver the orders that is why uh something need to be done uh here something need to be done automatically uh so in particular uh our solution uh is taking into consideration the supplier's holiday and is not placing the orders during these period of time but at the same time as the system has this information in advance we are preparing for such kind of periods in advance so the system is increasing the forecast uh prior the suppliers holidays to ensure that we will have enough quantity on hand to cover the demand during this period of time and the problems and mistakes uh discussion after the end of this season have to be

made as well as conclusions to ensure they won't happen in future of course this is a lesson learns that is extremely important to have uh for you and uh from the point from the standpoint of uh not making somebody responsible for some problems but to ensure that it they will not happen in future in the next year for example or during the next holiday thank you very much for your attention if you have some questions it will be I will be extremely uh happy to answer them otherwise thanks it was great thank you very much and please if you have any additional questions or you would like consultation with Leia team and our Consultants how to help to manage your inventories better during the Christmas rush or any other period Please feel free to reach out to us by the contact information available here our website www. leo. a or our email address or the

phone number directly thank you very much for your time uh you spent on this webinar we're really hopeful it was useful for you and hope to see you again maybe during our personal meetings or during the next and upcoming webinars thank you very much thanks have a nice day