Do Businesses still have to rely on seasonal sales ?

As Covid pandemic is taking another hit in India , the second lockdown is crippling the economy like nothing else before. It is like hitting someone hard with a hammer right on the head just after he had a major surgery and was recovering from it. But, most importantly it is to be noted that this lockdown have taken away two festival seasons , Vaisaki / Vishu and Eid ul Fitr. Many small business owners, especially those who are in to fashion retailing who had made their largest purchase of the year and stocked inventories just expecting the seasonal sales , have just made themselves liable for millions of rupees . its sad , truly devastating that our business community has to go through the disastrous outcome of this pandemic situation. In fact, this was the same situation last year during the same time of the year and that was totally unexpected because no one really knew about a pandemic hitting all over the world and all the fuss that could make to the lives of the people but it was not the case this year , was it ? why do we fall for the seasonal sale expectations ? Is it relevant in todays business environment ?

Let me tell you something about the southern state of India with a population of almost 34.8 million and a GDP of $140 billion. Kerala is one of the biggest consumable state in India with a large population relying on the goods which is sourced from outside the state. In August 2018, Kerala witnessed the worst flood ever in its history and suffered huge losses in businesses and infrastructure . Around the same time next year in 2019, the flood hit again and fortunately it was kind enough to spare the southern part of Kerala this time, and then , in 2020 March - May , as the world witnessed , Covid 19 and its lockdowns and now here we are in 2021 May with another lock down in place. Unfortunately, all of these events took place right before some kind of festival seasons and like you would imagine , every time our business owners suffered a huge loss because they were expecting the seasonal sales ( the biggest sales of the year ) during these times of the year !

While completely avoiding the seasonal sales would not be recommended , it is also not wise to rely on such seasons because the new world that we are living is under constant threat for some kind of natural disasters like pandemics, floods and cyclones etc. The Tauktae cyclone that just hit the western coasts of India making huge losses to the farm lands and floods in many areas is another example of this. Reports says that these cyclones will continue as the Arabian Sea is warming too fast and the surface temperature has increased by as much as 1.2 - 1.4 degrees celsius between 1982 and 2018 ( Credits - Finshots - article on "When cyclones hit Mango farmers"). So until some kind of giant leaps are taken by the nations around the world to reduce the carbon foot prints and make our economy more environment friendly , there is nothing much to expect otherwise in the future

So what's there to be done ? Do we plan for seasons or do we not plan for seasons ? The answer is we do both ! We could be more careful in planning because when everything is uncertain , its hard to predict and forecast. even the most efficient software can't predict the right outcome. So here are some points that would help in planning

1. Switch to monthly planning from seasonal forecasting : Season or not , the plan should be always for the short term. This can be done only if you have the right knowledge about the government policies, pandemic spreading patterns, weather conditions and the risks that would come along if you purchase more than what is required for the next month. This is more like a trade off but a calculated one. Here , you make small purchases with frequent deliveries , you would lose some price advantages of bulk buying and may lose some sales if the season does took off but you may still be safe with very low working capital and the loss that you would make in case of any kind of uncertainties coming along . Also, you could progressively make your purchases according to the actual response of the customers
2. Collaborative purchasing : This one is more of a difficult choice to make. its about collaborating with your competitors and co operating with them in the purchase from the same supplier . This may seem not to be practical at once, but believe me you would be surprised once you talk to your competitors about this and the advantage that this would give to both. This can actually reduce the working capital and give you a price advantage of bulk buying !
3. Inventory Management : Its high time that we look in to the inventory management and wonder how we do it is not actually sufficient , its poor and there is always room for improvement in purchasing , handling , storing and delivering the inventory .The Just in time ( JIT ) systems were considered to be a failure by many people during the pandemic because of the unavailability of toilet papers in the stores of many parts of the world, but I would say its purely a miss management of refilling the fast moving product because that is JIT all about, A perfect mechanism to know and refill the right products at the right time. Businesses should look deeply in to how they manage their repeatedly purchasing items, one time purchasing items, the dead stocks , the ageing stocks and so on . This is a topic which requires a detailed attention , so I would leave it for another time.

All of these solutions are recommended for retailers who stock in huge quantities and expect huge sales surge during the festive seasons but I would suggest that everyone who has to stock for doing the business should consider applying all these for a better business system in the future