How to prepare for (and execute) a successful holiday season

CPG sales teams are no strangers to the importance of holiday shopping events. They're critical points in the year that lead to an increase in sales as consumers flock to stores for gifts and other holiday necessities. They’re also a chaotic time, with inevitable challenges from inventory availability to tighter margins.

But the good news is, you can put some control into the chaos. Advanced planning and ample data equip CPG sales teams with the insight they need to be successful throughout the holiday season.

Of course, planning for a holiday event is easier said than done. That’s why we’ve put together this guide to help you develop a strategic CPG plan for the upcoming holidays. You’ll learn:

• Why formulating a demand plan is the best thing a sales team can do to tackle the holiday season
• What sales and inventory data you should be tracking before and during the holidays
• The common mistakes CPG teams make around the holidays (and how to avoid them)

Success starts well before the holiday season

Create a demand plan

Going into the holidays without a demand plan is like driving to a destination without a map — it’s possible to get where you need to go, but it’ll be a rough trip.

The first step to a successful holiday season is developing a demand plan months in advance. Effective demand planning requires examining historical sales data and current supply levels to determine your baseline expectation, and a strategy to exceed that baseline.

It all starts by evaluating the last holiday season’s performance. Compile the sales data from last year and use this as your starting foundation. Then ask yourself, what’s different about this year? Perhaps your retail partners are starting the holiday promotional season a week earlier, or you’ve received prime visibility on an end cap. Any changes must be taken into consideration as you formulate a demand plan.

By combining baseline data with insight into upcoming event promotions, CPG teams can create a demand forecast and set realistic sales goals for the next holiday season. Remember, your demand plan is the basis of all your holiday season decisions, from inventory levels to retail promotions and beyond.

Your demand plan is the basis of all your holiday season decisions, from inventory levels to retail promotions and beyond.

Communicate with retailers

While tools like Crisp help CPG brands access quantitative retail data, qualitative information is just as critical to the demand planning process. Much of that contextual data will come from conversations with your retail partners.

Understanding aspects of a holiday or event like promotional timelines, shelving setups, and inventory lead times are all pertinent to a CPG sales team’s success.

Additionally, inquire with your retailers about any promotional opportunities. It never hurts to ask about promoting your product through a price promotion, display promotion, or advertising later in the season to further push demand.

Work backwards

It’s tempting to set lofty sales goals and be aggressive with promotional opportunities. But doing so without understanding your organization’s ability to meet those goals — especially during chaotic times like holiday shopping events — leads to tight margins, out-of-stocks, and stressed-out retailers. 

To ensure you can hit your goals, create your demand plan backwards. Once you’ve established your baseline performance from last year and set reasonable sales goals accordingly, ask yourself:

• When do products need to arrive?
• When are holiday promotions running?
• Do we have enough existing inventory and/or production capacity to match these sales plans?
• What are current manufacturing and distribution lead times?

The answers to these questions help CPG teams formulate solid holiday demand strategies. For instance, if you know winter holiday displays will be set on October 31st, all products need to arrive well before then. You can plan manufacturing, inventory, distribution, and promotional efforts around this date, especially as warehouse space is limited and at a premium during these seasonal events.

The goal of planning backwards is to ensure your demand strategy includes enough time to get everything where it’s supposed to be safely and on time for the holiday shopping season.

This strategy must include contingency plans too. What happens if you’re selling more than expected? Do you have plans in place to ramp up production? If a product is selling like fire in one location, but poorly in another, what plans do you have in place to drive more demand to either place? Developing a holiday season strategy backwards must also include backup plans to cover all your bases.

How to stay on track during the holidays

Use data to your advantage

With challenges like supply chain shortages and shipping delays, having a wealth of retail data available keeps CPG sales teams proactive during the hectic holiday season. This is especially helpful when predicting supply chain and inventory needs throughout the promotional event.

Be sure track the following data points during the holidays:

• Sales trends YoY
• Sales trends by retailer/location
• Velocity metrics
• Inventory supply per retailer/location/warehouse
• Chargebacks

The more timely data you have available during the holidays, the more opportunities you have to pivot and solve inventory challenges, improve sales trends at underperforming locations, and show retail partners you’re invested in your brand’s future at their stores.

Prepare for the drop-off

Demand drops significantly towards the end of the holiday season. Shopping fatigue, spending time with family, and the ramp-up of holiday activities all contribute to this trend. The demand fluctuation ultimately impacts a CPG brand’s margins, as retailers scramble to sell the remaining inventory before the new year or season. But with data and advanced planning, sales teams can be well-prepared for this scenario.

Brands can tackle this situation from an aggressive or conservative approach depending on predicted holiday or event sales. One school of thought is to plan for a heightened sales season (in comparison to historical sales data) with increased safety stock. This provides benefits such as reduced supply risks and out-of-stock warnings, but also has the potential for leaving excess inventory at the end of the season. 

If you follow this strategy, ask retailers how they plan to handle the additional inventory. Are you responsible for paying markdowns? Who pays the shipping costs to get inventory back to the warehouse? Can the inventory be sold outside of the holiday season? 

A more conservative approach calculates inventory levels only slightly higher than the previous year’s performance. While this strategy leads to less excess inventory, it puts brands in a potentially risky position during the holiday season. If a product over-performs and becomes out-of-stock, CPG teams now have to scramble to distribute additional inventory.

Ask retailers how they plan to handle any additional inventory as sales drop off toward the end of the holiday season.

Common holiday season mistakes

Now, let’s talk about what could go wrong during the holidays – and how you can avoid these common pitfalls.

Executing promotions without a strategy

Running a promotion or discount without taking the steps to increase velocity is a major holiday shopping event mistake. 

Instead of jumping at the first opportunity to offer a discount, consider your margins and the efforts it’ll take to hit your sales and profitability goals. This can mean additional promotions, targeted advertisements, and more in-store signage. You’ll need these additional efforts in order to ensure your promotions are attracting new customers to your product. If you’re not doing anything to increase foot traffic or sales during the promotional period, you’re just handing out money during the most competitive time of year.

Communication, along with ample data, is a CPG team’s greatest asset during the holiday season.

Failure to communicate

During the holiday season, sales and manufacturing/operations teams need to be on the same page from start to finish. Failing to communicate transparently between teams can result in chaos.

For example, if the sales team works with retailers to set up a bunch of holiday promotions complete with extra shelf space, but doesn’t communicate with the operations team, they won’t know if manufacturing has the capability of executing on the increased inventory requirements. 

Or, if manufacturing doesn’t communicate current production levels, the sales team may take a more conservative approach to demand, potentially diminishing available holiday opportunities. The takeaway: Communication, along with ample data, is a CPG team’s greatest asset during the holiday season.

Capitalize on the holidays with confidence

Holidays and shopping events are stressful. But it all boils down to having a demand plan in place and access to the right data throughout the season. Crisp’s platform connects with retail partners to provide CPG brands with up-to-date dashboards measuring metrics ranging from velocity to distribution and beyond — so you can approach the holiday season with a solid demand strategy, ample inventory, and contingency plans in place.