The summer season is an interesting time of year for retail. Weather changes, increased tourism, and seasonal holidays all have an effect on consumer spending. Being aware of the current retail climate can help businesses maximize sales and avoid making preventable mistakes.
The Situation
As of May 2015, the state of the national economy is favorable for retailers. Job gains combined with increased consumer incomes will become a catalyst for the purchase of homes, cars, and various products and services in the upcoming summer months. The recent decline in gasoline prices is also putting more disposable income in consumers’ pockets, thus triggering an increase in retail sales. In comparison to 2014, Kiplinger’s Economic Outlook predicts a 7% increase in sales at restaurants and bars, a 10% increase for online sellers and catalog shippers, and a 6% increase in building material sales (stemming from the construction of new homes and remodeling projects).
Although the economic climate is promising, retailers should also be mindful of other factors that can affect sales, such as weather and tourism. Of course, weather conditions vary greatly from place to place and are not always predictable from year to year. Weather can have an impact on the length of a given season, which in turn influences sales. In fact, annual weather trends remain the same only about 15% of the time according to David Frieberg, vice president of marketing at Planalytics. Frieberg warns retailers against making sales forecasts based on weather conditions from years past and instead suggests that they “weatherize” their businesses. Weatherizing a business entails quantifying weather’s impact and removing it from historical sales. By readjusting their baseline, retailers become four to five times more effective at identifying potential opportunities and risks compared to the previous season. This ability to weatherize sales forecasts can prompt 10-25% gains for seasonal categories and eliminate wasting funds unintentionally. In contrast, not calculating the impact of weather can add substantial error to a seasonal sales forecast.
Similar to weather, increased tourism plays a role in predicting summer retail sales. Tourists are likely to spend money on goods and services when they are traveling. However, author Carole Simm explains in her USA Today article that the effects of tourist spending are not always positive. In order for tourism to thrive in a particular area, the proper infrastructure must be put in place to ensure ease of mobility for visitors. This means that more tax dollars must be spent on the maintenance of roads and visitor centers. Furthermore, the revenue generated by tourism sometimes falls into the hands of big hotel chains rather than local businesses. Knowing that there are both encouraging and adverse factors that will affect their summer sales, retailers should carefully plan how they will maximize the assets they have at their disposal.
Leveraging Your Resources
Retailers take many steps to boost sales during the summer season. Suppliers and merchandisers should be aware of retailers’ seasonal strategies and try to capitalize on them. Amit Bhaiya, CEO and co-founder of Dotcomweavers (a web and e-commerce solutions company), contributes his three suggestions of how to increase summer online sales on the Huffington Post’s business blog. His first recommendation for retailers is to send monthly summer-focused email newsletters to consumers. He notes that while people may not be doing as much online browsing during warm summer months, they are still likely to regularly check their email. Suppliers and merchandisers should communicate with retailers about how to be featured in their seasonal newsletters.
Social media use by consumers (especially millennials) remains steady year-round. Therefore, summertime is a great opportunity to engage with customers on social. Bhaiya proposes showcasing a new product or providing a discount code as examples of ways retailers can have an influence on consumers via social media. Suppliers and merchandisers can certainly take advantage of consumers’ social media use during the summer months.
Rieva Lesonsky, staff writer for Small Business Trends, provides additional suggestions in her article “5 Ways to Boost Your Summer Retail Sales This Year.” One recommendation she makes is to participate in or sponsor local community events that are relevant to a retailer’s target market. Even if you’re not allowed to sell product at these events, they are still great opportunities for your brand to gain exposure. Another way to promote your company during summer months is to host a party at your place of business that includes giveaways, music, refreshments, etc. Suppliers and merchandisers looking to expand their reach and increase sales during the summer months could also apply these tactics.
It is a great idea to capitalize on the increase of tourism prevalent in the summer. Try partnering with local hotels, restaurants, or tour companies to get brochures or business cards for your business in their locations. Lesonsky advocates for putting ads on city maps printed by your local chamber of commerce, which end up in the hands of tourists. Once again, these are strategies that could be employed by retailers and suppliers/merchandisers alike.
Summertime presents an array of unique challenges and growth opportunities for retail sales. By being conscious of market conditions and capitalizing on their available resources, suppliers and merchandisers can successfully reach their sales goals. For additional information on retail industry trends, check out the Top 10 Retail Blogs to Follow. Lastly, always remember that you have a better chance at increasing sales year-round if you engage your customers.
This article was syndicated from Business 2 Community: Summer 2015 Retail Sales Forecast
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