Let’s talk about the retail calendar. You’ve heard the word thrown around a lot, but what exactly is it? And more importantly, should you adopt it? The short answer: probably. The longer answer: well, let’s dig a bit deeper. (Psst! If you already know you want to use the retail calendar, you can take a shortcut and download Toolio’s free retail calendar here.)
What is the retail calendar?
Reporting is an important part of retail. To understand how your business is performing, you have to analyze monthly and quarterly sales metrics and compare them to previous years. One of the most important parts of running these comparisons, and one that’s often overlooked, is making sure you’re comparing apples to apples.
For example, let’s say you’re comparing sales in May 2020 with your sales in May 2019. What if the same month in the previous year had fewer weekends than the current month? In this example, there were 4 weekends in May 2019 and 5 weekends May 2020. Since most retailers see increased sales on weekends, it would be an inaccurate comparison. So, looking at comp sales between May 1-31, 2019 and May 1-31 2020 will not give us the full picture.
The solution lies in the retail calendar. The retail calendar is a calendaring scheme that was created to help retailers with sales comparability between years. It’s also an easy way to pinpoint important holidays and improve sales planning and projections around them.
How does the retail calendar work?
The retail calendar breaks the year down into 12 months and 52 weeks and defines each month to be either 4 weeks or 5 weeks. A month is guaranteed to have the same number of weeks from year to year, which is a key benefit of the retail calendar.
There are various retail calendars used in the industry, but the National Retail Federation (NRF) 4-5-4 calendar is by far the most widely used. Other options are, 4-4-5, or 5-4-4. The main difference between them is the starting month of the calendar. Since they’re all based on the same principle, let’s focus on how the NRF 4-5-4 calendar works in action.
The NRF 4-5-4 calendar breaks the year into 4 quarters, each made up of 3 months. Each month, starting with the first month will have 4, 5 and 4 weeks in sequence. Note that the calendar begins in February, which has 4 weeks, followed by March which has 5 weeks and April which goes back to 4 weeks, i.e. 4-5-4. This continues for each quarter.
Now, let’s see what this looks like in action! Below is Toolio’s retail calendar which shows how the 4-5-4 calendar would look for the year 2020.
Why does the 4-5-4 Calendar start in February?
Starting the reporting calendar in February has two major benefits. It keeps most holiday sales (e.g. Thanksgiving and Christmas) and return activities in Q4, allowing retailers to start Q1 fresh. It also aligns better with the fashion calendar, where Q1/Q2 (Feb-Jul) is for Spring/Summer and Q3/Q4 (Aug-Jan) is for Autumn/Winter.
That said, you can start your retail calendar in any month of your choice. Companies will typically have a financial calendar and have the first month of their retail calendar be consistent with their financial calendar.
Should I adopt the retail calendar?
Since accurate year-over-year comparisons are not possible with the regular calendar (also known as the Gregorian calendar), almost all major retailers use some form of the retail calendar. To get better at reporting and have a better sense of your business’ performance, we strongly recommend you to leverage the retail calendar.
When you switch to the retail calendar, the key challenge will be that the month definitions are different from those of a regular calendar. For example, below is the NRF retail calendar for March 2020. In that example, April 1-4 from the Gregorian calendar are considered a part of March in the retail calendar.
To help retailers easily transition from the Gregorian calendar to the retail calendar, we have created a free tool called the Toolio Retail Calendar.
What is the Toolio Retail Calendar?
The Toolio Retail Calendar is a free tool that helps retailers easily switch between the Gregorian calendar and retail calendar. Using the Toolio Retail Calendar you can easily see:
- The week, month or quarter a particular day corresponds to in the retail calendar
- Calendar days with holidays that will impact sales (Easter, Mother’s Day, Memorial Day, etc.)
- The same day last year on the retail calendar
You can check out the Toolio Retail Calendar here. If you have any questions on how to use the tool, you can check out our help center, which dives deeper into configuration and maximizing your use of the calendar.