Have you started your holiday shopping yet? Odds are you haven’t, since only 32% of U.S. shoppers start in October or earlier. However, this year, you and retailers are facing the same problem: a quirk of the calendar means there are only 27 days between Thanksgiving and Christmas, five fewer days than usual, so retailers have a number of tricky balancing acts they’ll need to pull off to make sure it really is the most wonderful time of the year.
If your team hasn’t considered the following three challenges, though, now is the time – before they become profit pitfalls and everyone from FP&A (financial planning and analysis) to operations is caught flat-footed.
1. Building Flexibility in Forecasting for Variable Advertising Costs
TV advertising is still the most common form of advertising in the U.S., with streaming also in the top five. However, fewer days between Thanksgiving and Christmas means there are simply fewer slots available for purchase.
For example, let’s look at NBC’s Sunday Night Football, the top-ranked show in primetime for 13 years straight. In 2023-24, a 30-second spot averaged $882,000, with five games airing between Thanksgiving and Christmas (including a Christmas Eve game for the extra-last-minute shopper). This year, there are only four games in that same period, meaning there are only four chances to reach football’s massive audience during the week’s biggest games.
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The law of supply and demand dictates that prices will go up as retailers compete for fewer slots across TV and other channels. There will be fewer chances to play an ad on the holiday music station in a targeted metro area. Influencers have fewer days to schedule posts. There are fewer days to hit a click quota. The list continues. Advertising was already likely to be up 5.6% this year (excluding political advertising) to $360 billion – and those high prices could spell disaster.
Flexibility in projecting and forecasting can help solve this issue. It’s no longer enough to have a set amount of money put aside for advertising; it’s now essential to know where you can pull additional funds from and adjust figures on the fly. If there are multiple versions of a file floating around, or spreadsheets have to be updated manually, or stakeholders don’t know if something needs review, the process slows down and opportunities can be lost. With the number of different teams involved in advertising, operating from the same easily updated information helps prevent miscommunication and overspending.
2. Satisfying Patient Deal-Hunters and Desperate Panic Shoppers with Analytics
The U.S. shopping population is fairly divided on what their budgets will look like this year: 33% say they’ll spend less, 43% will spend about the same, and 24% will spend more. Consequently, we can estimate that about three-quarters of shoppers will fall into a deal-hunting mentality, and Deloitte found that 75% of shoppers were planning to participate in October and November sales, up from 61% last year. This indicates that these shoppers are willing to wait for the right price. Meanwhile, the last quarter of shoppers are more likely to be panic buying – their larger budgets can accommodate higher prices.
This leaves retailers with a supply conundrum: how do they balance those who are playing the long game while still having enough for the last-minute shoppers? How do they make sure both populations can buy those hot holiday toys or electronics?
Both real-time and predictive analytics can help here. For example, Target has already cut prices on 2,000 items, including Bluey and LEGO toys, offering shoppers a cheaper way to tap into an ongoing trend and a perennial gifting favorite. Obviously, that’s immensely valuable. However, what retailers must do now is respond as quickly as possible to shifts in consumer and competitor behavior. As with advertising, that means adjusting budgets on the fly. More importantly, retailers need to bring their finance teams in early to keep updating the numbers and reworking them throughout the season as needed.
3. Data Consolidation for Logistical Snafus
Not every part of a supply chain is under control. For example, the dockworker strike ended quickly, but still caused shipping backlogs. Hurricane season ends on November 30, and Helene and Milton could be joined by more troublesome storms before then. Meanwhile, it looks like Great Lakes shipping could be affected by higher-than-average precipitation. More snow could slow down trucking both in the Midwest and Mountain West.
And don’t forget: after the holidays comes the deluge of returns.
It’s not enough to effectively manage your inventory as we discussed above – it’s about building resilience in case one part of the system is suddenly shut down. Consumers aren’t concerned if there’s a snowstorm in the Great Plains; if they need a toy now and you don’t have it, they will find someone else who does.
As discussed previously, working from the same information is crucial, and it’s enabled by data consolidation. Finance, operations and more need to be working in lockstep and know the latest about what items are where and when they are expected to arrive or be distributed. If they are all working on the same platform, everyone receives the same updated numbers at the same time. This is particularly helpful for FP&A, which needs a clear perspective of what is on time and what is not in order to allocate resources accordingly.
The National Retail Federation projects holiday spending in November and December to total up to $979.5 billion and $989 billion, presenting a major opportunity for real revenue boosts. Even with fewer days than usual, retailers can still capitalize on this spending surge. However, it’s not only about time management. To keep the holidays happy, retailers need to focus on managing capital wisely and flexibly, uniting your departments and addressing potential issues in places such as advertising, sales and logistics, too.
As Co-founder and Chief Solutions Architect of Vena, Rishi Grover is passionate about applying technology to help companies achieve their strategic, financial and operational goals. He has helped many Fortune 500 companies re-engineer and optimize financial processes. His expertise in financial planning and regulatory reporting helped him to the position of Director of Enterprise Solutions at Clarity Systems before he co-founded Vena Solutions with Don Mal and George Papayiannis. Grover holds a Bachelor of Applied Sciences from the University of Toronto, specializing in Computer Engineering and Communication Systems.
