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retail forecasting

Retail forecasting is a must win game to ensure world cup success!

With the 2018 World Cup kicking off on Thursday 14th June, only 30,000 England fans are expected to make the trip to Russia: a fraction of the number that attended the 2014 tournament in Brazil. However, given that retailers here at home are expecting over a 25% surge in sales, it seems fans have by no means lost interest. The question is: can these businesses be confident that their retail forecasting processes are up to the test?

Retail forecasting: football might be coming home

As football fans across the globe prepare for the big event, England fans are undertaking their own pre-tournament rituals. Stocking up on everything from the new widescreen TVs to beer and snacks, events like the World Cup provide retailers with a welcome boost in sales. After all, the world cup will provide many sports enthusiasts with a great excuse to drink endless amounts of beer.

Ultimately, much like England’s performance, demand fluctuations are inevitable and there is always there the risk that it will never materialise at all!

This poses retailers with two-real challenges:

1) Ensuring there are sufficient levels of inventory to keep up with match-day peaks in demand
2) Mitigating the risk of excess after the World Cup (or rather when England get knocked out prematurely)

Events like the world cup present businesses with a real challenge: on one hand, retailers do not want to leave football fans disappointed with stock-outs. Yet on the other, no one wants to be left with huge amounts of excess stock at the end of the tournament: especially if these products have been branded specifically to tailor for the world cup.

It is not just the overall increase in demand that retailers have to worry about: demand will also vary hugely between different channels and locations as well on a day to day basis. With this in mind, retailers not only have the question of whether they have enough stock but also what stores they must allocate to!

With demand as uncertain as England’s ability to get through the group stages, what can you do to prevent your operations being left in the lurch?

Retail forecasting is a game of two sides: Seasonal demand vs special event demand

With demand set to increase throughout the 2018 World Cup, it is easy to get carried away only focus on the impact of the tournament on sales. However, it’s worth bearing in mind that many of the products related to the world cup will also be exposed to some natural level of seasonality.

retail forecastingTake for instance beer: retailers expect to see a spike in demand during the weekend as consumers sit down and relax after a tough week at work. This is a normal demand pattern. However, as summer approaches, consumers are also more likely to sit outside and soak up the rays with an alcoholic beverage. According to research, as many as 50% of consumers indicated they based their purchase decision on the weather: a fact which may explain this seasonal deviation.

However, with the World Cup looming, this demand pattern is likely to become far more volatile. To add further complexity, many of the matches will also take place during the week. Thus, with England playing on Monday 18th, Sunday 24th and Thursday 28th June, retailers will need to work hard to ensure they achieve the right inventory levels to satisfy both seasonal and special event demand!

It’s not over till the final whistle

Managing just one event is painful enough. However, the problem with the world cup is that is a series of many individual events. What’s more, retailers cannot be sure of exactly how many they will have to manage. After all, what will happen if England make it to the finals? More importantly, what will happen if they don’t make it past the group stages?

Both these scenarios could have a major impact on demand. In the event that England surprise us all and go the distance, retailers will have to cover a much greater volume of demand as our national team play a total of 7 games. Yet, if England fail to make an impression, retailers will only have to cover demand for just 3 games. With this in mind, is it worth investing in additional stock?

Never underestimate the importance of keeping a clean sheet

Amidst all the excitement, retailers could easily lose sight of the “true” source of demand. The problem here is that seasonal demand and special event demand become virtually indistinguishable. Given that the World Cup only takes place once every 4 years, the levels of demand enjoyed by retailers this summer are unlikely to be repeated until the Euros kicks off in 2020, if not the next World Cup in 2022.

When it comes to retail forecasting for next year’s summer, retailers will depend upon sales history from this summer. Consequently, if steps are not taken to “cleanse” data now, this will provide an unrealistic picture of anticipated demand: an issue which will result in over ordering and excess stock!

Which retailer will take home the trophy this summer?

There is no question that supply chain teams are always under huge pressure to ensure operations are well aligned to ensure success before, during and after a special event! It will be interesting to see which retailers strike success during this year’s world cup!

With only a few weeks until the big event, what steps have you taken to prepare your business for the world cup? We would love to hear your thoughts.

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Jan - Author

Jan Kraaijeveld

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