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  • Are winter spending patterns working for or against your business?

    15 July at 17:54 from atlas

    Seasonality and cyclic fluctuations affect the profitability of many businesses. Changes in buying trends may be caused by many factors including NZ or foreign holiday periods, sports seasons, summer to winter changes and longer term changes such as financial cycles of boom and bust.

    It is possible to 'beat' the cycle, providing you understand your customers well, understand their consumption needs, keep an eye out for trends, are proactive about taking measured risks and you are open to opportunities. How?

    So what does 'beat' the cycle mean? The 'cycle' refers to fluctuations in sales that occur when customers choose to buy less or more of your products, because events linked to the season are altering their motivation to purchase. Perhaps weather patterns are keeping shoppers at home (who are potentially interested in buying on-line) or customers' perception of what they need in cold weather doesn't fit with your products in stock.

    Firstly, cyclicality in demand is predictable. This means you can plan for staff to take holidays during slower periods, and take the extra time available to invest in staff development, business reviews, implementing new systems, product development and business planning.

    Secondly, savvy investors know that the best way to beat risk is to combine counter-cyclical investments - ones that reduce overall risk because they do well at different times in the financial cycle and therefore even-out the yield. As business owners, you can either look to develop a market that is experiencing opposing patterns or invest in two or more businesses or ventures that provide economies of seasonality.

    For those not feeling the love in winter, an overview of some of the best strategies we have seen to help increase sales in the "off-season" are:

    • Bundle less popular seasonal items together with regular items - when items in a bundle are not priced separately, it creates a feeling that something is free, providing more motivation to buy.
    • Provide a discount or extended credit to encourage an off-season purchase.
    • Create or source a rare/exclusive product or service and charge more for it.
    • Use your business information systems to track sales over the year and analyse causes of peaks and troughs. Use the information to plan and prepare.
    • Sell on-line to customers not experiencing the same seasonality (e.g. internationally) or to other parts of NZ that are not so seasonally influenced as your local market.
    • Plan your inventory ahead of time to avoid being left with out-of-season stock that could become obsolete.

    Like any business challenge, the answer lies in analysis, planning and reviewing your options. Also a degree of flexibility!

    Great Article thanks to Crowe Horwath NZ June Newsletter

 

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