Using a Retail Planning Calendar
Tip #441 - Smarter Retail Planning
Dear Tip of the Weeker,
This week's Tip is inspired by a question asked on the Retail Mastery Group forum. Shannon writes,
"This seems like a very obvious question, but how do you plan sales figures by week? What I mean by this is, do you count Jan 1 - Jan 7 as week 1, or do you count starting with the first full week of the year? This year, for example, would be Jan 2 - Jan 8. I may be over-analyzing this, but the more I think about it, the crazier it makes me!"
Shannon, it's a really good question and it reminded me that independent retailers might not know about or use the traditional "4-5-4" retail calendar when planning their sales.
Since a picture is often worth a thousand words, here's a PDF of the 2010-2012 "4-5-4" retail calendar. Just click here to download. Print it out so you can look at it as you read this Tip.
The 4-5-4 calendar came into use by large department stores during the 1930s as sales on Saturdays and Sundays started to become bigger than weekday sales.
The problem with the regular calendar is that the number of Saturdays and Sundays in a month can vary from year to year. For example, May 2010 had 5 Saturdays and May 2011 has only 4. If you're comparing one year to the next when planning sales this can affect your accuracy.
To solve this problem, in the traditional 4-5-4 retail planning calendar, each quarter is made up of three months, the first with four Sunday through Saturday weeks, the second month with five Sunday through Saturday weeks, and the third with four Sunday through Saturday weeks.
Hence the name, 4-5-4.
This 4-5-4 calendar system evens out the number of Saturdays and Sundays in every month and it also lines up most holidays to be on the same week each year. There are a few holiday exceptions, though, like Easter whose date can vary quite a bit from year to year.
Problem: the 4-5-4 retail calendar gives you 52 Sunday through Saturday weeks - or 364 days. Periodically, usually on leap year, there will be a 53 week year to catch up on the missing day. 2012 is one of those 53 week years.
So, how important is it that you use the 4-5-4 calendar in your sales planning?
Honestly, it depends on how much sales volume your store does and how big the difference is between your Saturday sales and your weekday sales.
Imagine a large department store chain like Macy's. Let's say there are 50 stores in the chain and in an average store the sales volume difference between a regular weekday and a Saturday is $20,000. (Not an unrealistic scenario.) That gives you a MILLION DOLLAR DIFFERENCE in sales between a 4 Saturday month and a 5 Saturday month.
For a business like this it is obviously very important to use a 4-5-4 calendar.
Now think about a smaller company with just one store. If the difference between Saturday sales and regular weekday sales is about $1,000, that's not such a big deal.
Using the 4-5-4 calendar will always give you the most accurate forecasting, but for some smaller retailers the hassle of learning a new calendar system just may not be worth the benefit.
Larger stores, stores with a big difference between weekend and weekday sales, and multiple store chains will certainly benefit from smarter planning when using the 4-5-4 retail calendar!
You can get a new calendar every year on the National Retail Federation's website.
Wishing you great sales and lots of fun,
