From Nightmarish to Nice: The Halloween Supply Chain
28 Oct 2019
This month, as orange pumpkins decorate doorsteps against a backdrop of inky black sky, the UK is preparing to celebrate the most frightfully fun time of the year – Halloween. Widely considered an import from our American cousins, Halloween has steadily been growing in popularity in Britain in the last decade to become the third biggest retail event of the year, after Christmas and Easter. With spending on this spook-tacular holiday almost doubling in five years, from £230 million in 2013 to £419 million in 2018, Halloween has rapidly become a significant opportunity for retailers and manufacturers, as adults have embraced the traditionally kids-orientated event.
FMCG, CPG and Retail in particular stand to benefit from our newly-acquired enthusiasm for all things ghoulish and ghastly, as beauty, clothing, food & drink and decorations are given a fang-tastic makeover for October. A successful Halloween can give businesses a warmly welcomed boost before Christmas reaches its crescendo in December, but only if they’ve properly planned for the 31st October. And of course, uniquely this year, the spectre of Brexit looms large…
In this blog, we explore the challenges facing retailers at Halloween, and offer our solution for businesses looking ahead to 2020.
Costumes is the biggest Halloween category; responsible for almost a third of Halloween spending last year. It’s a double-edged sword of challenge and opportunity, as the demand is as intense as it is brief.
There is an element of predictability, with the tried and tested classics of ‘witch’ and ‘skeleton’ faithful stalwarts. However, every year reveals a must-have costume and organisations must anticipate both the trend and the volume at peak to capitalise on its popularity, such as when 2015’s film Suicide Squad spawned a slew of ‘Harley Quinns’. For supply chain, the keyword here is “agility”. The issue of demand is further amplified by social media, as its reach and influence shapes customer appetites more dramatically and rapidly than ever before, making adaptable planning and a responsive supply chain essential.
Forecast inaccuracy can result in warehouses filled with surplus stock, putting pressure on working capital and increasing the risk of write-offs. This applies all-year round but can be a particularly expensive mistake for themed inventory, such as specialty Halloween confectionery. The sector is worth £35 million in the UK alone, but Halloween’s one-day life-span provides a narrow window of opportunity.
When it comes to inventory management during a peak period such as Halloween, it’s a critical balance to be stuck between meeting customer demand and employing a lean supply chain to enable agility, responsiveness and ultimately, profit. A missed shipment could result in a shortage, but a late delivery can lead to surplus inventory and slashed prices in the first week of November. Although, it should be noted that a Cadbury’s goo-head egg can be eaten any time of the year…
To avoid a nightmare on Halloween, savvy retailers are using Integrated Business Planning (IBP) to alleviate the short-term strain on the supply chain, by taking a long-term view and planning for it well in advance. Businesses can create an integrated view of the operational plans and planned capabilities across the entire business over a 24 to 36-month rolling horizon, enabling retailers to anticipate trends, peaks and troughs, and to align their supply chain to navigate these at optimum cost in plenty of time. And, organisations which have developed an effective IBP process use it to plan for uncertainty by developing multiple scenarios which can then be “pressure tested” in advance.
IBP can revolutionise the supply chain by encouraging collaboration across all aspects of the business to produce a realistic demand plan, based on shared data, with the IBP process integrated up and down the value chain. This collaboration can reduce operating costs by up to 50% as well as improving customer service levels. The sharing of information leads to improved understanding between the supply chain partners and improved forecast accuracy; this reduces the cost to supply and ultimately, results in satisfied customers.
The savviest of the savvy retailers have utilised the incredible wealth of customer data now available, to implement a data-driven planning operation. Using advanced analytics, companies can identify hidden patterns and interpret signals early to anticipate future customer behaviour. By understanding what the customer wants and is likely to want in the future, they can stay a step ahead in terms of meeting customer demand, with faster response times and shorter lead times.
As ever, the ultimate aim is an optimised end-to-end supply chain that balances the fine line between comfortably filled shopping baskets and devastatingly empty shelves. Just think of Halloween as a practice run for the main event of the year – Christmas!
Do you get spooked by planning for seasonal events? Get in touch with us to find out how we can make supply chain planning an absolute scream.