Is your Business Ready for the Holiday Season?

The holiday season is fast approaching, bringing with it significant shifts in consumer demand. According to the National Retail Federation, In 2025, Halloween spending is projected to hit a record $13.1 billion in sales which indicates that meticulous accounting and planning for seasonal demand spikes are essential for a robust supply chain. Because seasonal builds typically begin before October, the good news is that advancements in AI-driven demand planning tools can predict these Holiday demand spikes well in advance. Proactive demand and inventory planning allows businesses to stock optimal inventory levels, meet demand, and significantly reduce operational costs. Let's explore Seasonality and Holiday models further and learn why including seasonal trends and Holiday effects prove crucial for peak and low season planning.

The nature of Seasonality in Supply Chains

Seasonality refers to predictable, annual changes in product demand driven by specific periods of the year; a classic example is the increased demand for cold beverages during warmer summer months. However, you need to understand that seasonal effects aren't limited to fluctuating demand due to weather and temperature; seasonal Holiday demand spikes also introduce unique challenges such as shipping delays, labor shortages, and factory closures. A notable example of such a challenge was the unexpected impact of Disney's 2013 movie Frozen. This particular movie's overwhelming popularity led to incredible demand for Elsa and Anna costumes leading up to Halloween in 2014 and beyond, and created a logistical nightmare for costume Supply Chain managers until demand could finally be addressed.

To proactively address such market challenges, businesses must understand the nuances of Holiday season demand spikes within their specific industries and markets, and plan all necessary Supply Chain actions well ahead of time of demand impact. This blog will explore some key predicted trends and potential challenges for the 2025 Holiday season.

Current trends for the 2025 Holiday season

Numerator's 2025 customer insights report indicates that grocery stores and big-box retailers will be the top shopping channels for the upcoming season. Most Holiday shoppers anticipate spending over $50 with the Thanksgiving, Hanukkah, and Christmas Holidays expected to drive the highest spending. For the 2025 Christmas Holiday, 80% of shoppers plan to spend more than $100.

McKinsey's insights also reveal a general shift in consumer behavior this year: driven by inflation concerns, shoppers are prioritizing value over scarcity. While consumers do plan to spend a slightly higher total amount in 2025, more of their overall budget will be allocated to essential goods rather than discretionary items, which certainly impacts Holiday spending.

Key Holiday Season Challenges and Possible Solutions

Businesses often face several common challenges during Holiday seasons. Here's a quick review of some key Holiday challenges and their potential ways to address them:

1. Labor Shortages: A significant number of employees in warehouses and distribution centers become unavailable during a Holiday period just as demand rises, potentially leading to supply disruptions. Solutions include building agile workforces through flexible staffing models, hiring Seasonal workers, and offering compensation for peak-season and off-hours work.

2. Warehouse Operations: Managing increased demand and supply during Holidays makes warehouse operations particularly challenging. This could be mitigated by streamlining operations through automation and optimizing the efficiency of human-machine interactions. Increased staffing levels during peak periods is the traditional method of meeting increased demand on operations.

3. Spiking Demand: Accurately forecasting Holiday demand spikes with lead time is critical. Sophisticated planning tools, such as Areté Prevail11, can provide immense value by delivering precise demand forecasts that consider seasonality, promotions, Holidays, exceptions, and external factors. Utilizing AI-powered forecasting engines typically increases Demand Planning success.

4. Supply Chain Delays: Entire industries normally experience Supply Chain disruptions and delays during specific Holiday seasons, impacting their Supply Chains from raw material ordering to final delivery to consumers. A comprehensive and sophisticated Sales and Operations Planning (S&OP) process can be a game-changer for addressing Holiday disruptions. Refer to our previous blog to understand general guidelines for creating a successful S&OP process. Additionally, integrating demand and supply planning tools is crucial for creating a realistic operation plan. Predicting demand is not sufficient to react to demand spikes; demand, distribution and production must align to prevent retail shortages and stockouts.

5. Cash Flow Management: Elevated expenses coupled with slower payments can put significant financial strain on businesses during Holiday periods. A skilled accounting team can help plan for delayed payments and effectively manage cash flow.

Any Holiday season can deliver Supply Chain challenges, but through proper planning and resource allocation your business can significantly benefit from the sales boost during the Holiday period. Successful businesses plan ahead and establish multiple backup strategies for potential failures during critical sales periods; be sure you take the required steps to plan and execute effectively so that your business thrives during Holidays too!