What Retailers Must Consider when Planning During a Recession (a Webinar Recap)

August 12, 2022

holiday-planning-recap

We recently held a webinar about holiday planning, with a special emphasis on what to keep in mind during a recession. We presented it in vignette-fashion, with a few of our esteemed leaders playing the roles of Analyst, Merchandiser and Buyer, and walking us through how a real-life scenario might play out. We had a ton of fun with it. Here’s a quick recap of what we covered. 

Hypothetical Holiday Planning, Unpacked

Disappointing Sales = Adjustments Needed

Our Head of Marketing, Andrea Lechner-Becker, was our host, and she set the scene to get us started. Our pretend Analyst, Trey Kamb (who is our real-life Customer Success Implementation Specialist), was sitting down on a hypothetical Monday morning to review the past four weeks of sweater sales. Unfortunately, sales aren’t what they were expecting. 

So, Trey takes the first few styles in Toolio, enters them into the forecast menu and forecasts off of the merchandise plan. He plays with a few scenarios, but it still feels aggressive. He then runs another forecast, this time mirroring what his company did the previous year in one week looking at a style/color relationship. It looks much better, so he decides that’s what he’ll suggest to his Merchandiser, Mary Saunders (our real-life Head of Finance & Operations). He updates the scenario and pushes it out to Mary via Toolio. 

Preparing a Recession Scenario

Mary pulls in Trey’s reforecast and sees how it’s doing compared to the current plan. She has to take a deep breath; it doesn’t look good. She knows she needs her plan to match what Trey has reforecasted from bottoms up. After trying different adjustments, Mary discovers that her plan can match Trey’s plan if they plan up about 1% to last year. She saves the scenario as “Knits Recession Scenario.” 

Then, Mary compares this new scenario to her original plan. She determines they’ll need to cut some receipts to get rid of inventory, because it likely won’t be selling. Reviewing their planned receipts versus their now recession-proof projection, she calculates that they’ll need to cut about $100,000 in receipts. Now she’ll have to let their Buyer, Lacey Rotsaert (our real-life Solutions Architect) know the unpleasant news. 

Deciding What to Cut

Lacey is absolutely married to her original assortment, and is crushed by the news that they need to cut $100,000 in receipts. Still, she and Mary together review their receipts from largest investment to smallest. They realize that the argyle sweater was the biggest investment, but was also the most controversial choice. Lacey says she was just about to book that order this week, but Mary tells her not to place the order. By doing this and changing the price point of their cashmere styles, they compare it to the recession scenario and find it’s right on plan. They decide to propose this to their leadership team. 

Lessons Learned

Early Changes Make a Huge Difference 

By staying close to their sales and projections in Toolio, our fictitious company was able to make changes and avoid ending up with too much inventory they couldn’t sell - within about 30 minutes. Without Toolio, such analysis and planning would take days and possibly even cost them the chance to make necessary changes. Phew - we’re so glad our hypothetical team acted fast and used Toolio! 

After working through this scenario, we wrapped up the webinar by discussing a few nuances we’ve learned about holiday planning in a recession, including:

  • When the economy takes a turn for the worse, luxury goods (like cashmere) are often not impacted like other goods are.
  • However, consumers buy closer to their need (e.g. they might buy a sweater in Q4 when the weather actually turns cold, rather than in Q3 like they may have otherwise).
  • Taking your time to purchase POs and waiting until the last possible day to make a booking can help you be wiser with your financial investments into product. 
  • Using a system like Toolio helps you improve your communication by leaps and bounds. Instead of having to share different versions of spreadsheets, your key stakeholders can all be looking at the same information. 

Now that your interest is piqued, are you ready to check out the whole webinar? Watch it on demand here, or request a demo here

Andrea Lechner-Becker
Head of Marketing