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Ramp Up Your Retail Inventory for the Holidays 🎁

Have you ever wondered why the shopping day after Thanksgiving is called Black Friday?

Some believe it was given the name to mark the day many retailers begin to turn a profit for the year. According to a study from the National Retail Federation (the nation’s largest retail trade association), many small and mid-sized retailers report that as much as 20 percent of their annual sales occur during the holiday season. Whether you’re “in the black” before the holidays or hit that point once they are in full swing, there is no disputing that the weeks following Thanksgiving are usually the busiest.

With the holidays being such an important time of year, smart inventory and merchandising planning is an absolute must. So, where do you begin? The following planning tips can help you get organized for the big season rush that will be here before you know it.

Merchandise selection
Most likely, you have a pretty good idea which items are your best sellers. As the holidays approach, you want the bulk of your inventory to be these tried and true items. What sells best in September, October and November will most likely be the items to stock in the greatest numbers for the holidays. You can’t afford to run out of top sellers in the middle of the season.

Just as you should identify your winning items before the season starts, you also need to remove any unpopular items from your shelves. To do this, you might have to discount these items more significantly. Start this earlier during the holiday season so you can free your shelves for your winning items during the busy holidays. These will grab your customers’ attention and generate sales with higher profit margins.

Ending inventory
Your profitability depends on careful inventory planning. Having the right amount of stock at the start, middle and end of the season can be a delicate balancing act that requires you to carefully assess both last year’s holiday sales as well as trends for the current year. The goal should always be to have enough of your best items in stock for your customers while avoiding excess inventory at the end of the season. Post-season markdowns can seriously diminish profits.

Purchasing planning
For each product that you want to sell during the holidays, obtain a delivery date from the vendor and quantities you’ll receive by the delivery date. You will want to clearly communicate to everyone you’re buying from your specific holiday inventory needs. Make sure to ask about substitute items if something isn’t available. 

Vendor management
You can’t afford to have vendors that don’t deliver when they say they will. Their punctuality can make the difference between selling through items during the season and having to mark-down stock because it was received too late. If a vendor can’t expedite deliveries to meet your specific business needs, don’t work with them. Timing is everything when it comes to retail sales.

Gift card sales and redemptions
Gift cards are a big segment of sales for many retailers – and they can have a big impact on your inventory. Sixty-seven percent of all gifts purchased in 2016 were gift cards, most of which were for clothing, shoes and accessories.

The objective of any retailer that offers gift cards is to have them redeemed for full margin sales and not for marked-down clearance merchandise. Careful inventory planning can reduce the amount of items you’ll need to mark down in January and prevent gift cards from being used for purchasing clearance items.

Unusual items
Yes, it makes perfect sense to focus the bulk of your pre-holiday inventory ordering on those big-sellers that will hopefully fly off the shelves. Yet, it may also be smart to carry at least a few unique or specialized items that your customers can’t find elsewhere. These are often the items that draw customers to you who are looking for those “special” gifts that they can’t get anywhere else. You may just find that something that you weren’t quite sure about becomes a big seller. Make sure to put this on your list for 2018 inventory planning!

Timing your marketing
Any discussion of holiday inventory and merchandising planning requires at least some mention of marketing. This applies to small and big retailers alike. National chains have the luxury of big budgets for full-page ads in top magazines, ads on TV, top positions in paid search and large social media campaigns. For smaller businesses with less impressive budgets, there are still options. A little creative marketing can go a long way towards boosting holiday sales.

Well ahead of Black Friday, develop a holiday marketing plan. This can be broken down into three categories – online marketing, print advertising and events.

Online marketing
More than ever, small businesses are leveraging online marketing because it is both effective and relatively inexpensive. In 2015, 59 percent of time spent looking at retail was spent on mobile – although dollars spent on mobile was only 15 percent. However, this indicate that users are seeing ads and researching on their phones, but then finishing their purchases later, on their desktops. Email marketing is a good place to start. Reach out to your email list of customers with a coupon or gift certificate that they can use and share with a friend.

You may also want to mention new products and trends for the season. The holiday season is also prime time for being active on your social media channels and blog. Studies show that today, almost 70 percent of the American public uses some form of social media. You can alert your online audience of promotions and sales via Twitter and Facebook and even share photos of your products on Instagram.

In the months leading up to the holidays, it can be well worth your effort to try negotiating with targeted publications on print and online advertising space. While you may not have the buying power of your larger competitors, you might be surprised to find that many publishers are willing to work with smaller businesses.

Pulling together an open house cocktail party or afternoon event with Santa requires advanced planning. If you’re considering an event, start early to avoid having to pay a premium on what you may need. A well-planned, perfectly timed holiday event can be the ideal way to kick off a busy holiday season.

You should also consider throwing a holiday party for your employees in which they can bring friends and family. This shows your appreciation for your employees, giving them the positive boost they need during a high-stress, busy season. It also shows their family and friends how you care for your employees, which will incite them to shop at your store. You can also consider offering their friends and family discount coupons at the party for them to use later in your store.

Holiday season budgeting
Many businesses require additional cash on hand to cover seasonal staff, purchase inventory or pay for marketing expenses. When it comes to holiday season planning, it often takes money to make money. A bank loan is not always realistic because they can take weeks or months to process, and approval can be very difficult. A flexible, readily available source of cash is often a better option.

The holidays will be here soon enough. The businesses that will make the most of the season will be those that carefully map out an inventory and merchandising plan and follow it. With the right mix of great inventory, smart marketing and readily available cash, you can make the 2017 holiday season a tremendous success!

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Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at