Managing profitability during changing seasons

The seasons are changing and Autumn is finally here, but over the past couple of months, many fashion retailers have faced hard times as warmer weather has kept consumers out of shops. So how do you manage profitability during seasonal changes, especially when they can be so volatile?

Reports from BDO show that high street sales dropped by 2.8 percentin September across all sectors. It also showed that compared with the same time last year, fashion sales fell by 5.9 percent. The warm weather looks to have put off shoppers from buying their winter warmers until they need them.

Recently, fashion retailer H&M attributed its Q3 profit fall to warm weather in September putting shoppers off buying winter clothing. Profits also suffered due to further discounts being made on summer season clothing.

So, what can be done to stay profitable when seasonality and weather are so uncontrollable?

Investment online

Investment in retailers’ websites and apps can help with profitability. The likes of Asos have invested heavily in its SEO capabilitiesand have seen a boom in sales figures. Others have followed suit, with H&M extending its online marketsto Canada and South Korea and adding a total of 11 new online markets to its portfolio by the end of 2016. This effort has been made to capture a more digitally-minded consumer.

Websites and apps allow consumers to shop from various locations, including the comfort of their own home. When the weather does eventually get dreary, shoppers will already be primed to shop in your store, or if they decide to stay inside, they can continue by using online portals. This is why having a robust and engaging website and app is important in sustaining and driving sales.

Keeping stock of seasonality

Stock is also an issue when it comes to seasonality. Whereas a physical store may only be able to stock one season’s worth of clothing, namely Autumn/Winter collections, an online range can be more extensive. This can mean continuing with sales whatever the weather and still remain profitable.

Successful omnichannel retailers plan carefully what stock should be on display in their bricks and mortar stores and which to keep for online. In addition, some use their store space for ‘showrooming’ whereby shoppers can view items but will eventually buy online. This method can help with prioritising what the current demand is and what space is available to showcase products.

Alternative revenue streams

Retailers can also look to find alternative revenue streams to keep their profitability during the quieter months. This could include the likes of reward or savings programmes which are offered to customers, post-transaction. These can encourage their loyalty, drive repeat business and generate an additional income to boost the bottom line.

It’s clear that seasonality can have one of two effects. It can either be a positive boost to sales if the weather and clothing collections work in harmony, or it can be negative and cause sales declines, much like we’ve seen recently. This means it’s up to retailers to look at putting strategies in place to stay profitable throughout the year, no matter the weather. I’ve already seen positive change in the industry and look forward to seeing even more.

Guy Chiswick is Managing Director of Webloyalty, Northern Europe. He has 17 years’ experience in marketing and advertising and has worked for some of the industry's biggest brands as well as emerging start-ups.

Guy leads a diverse team of experts focussed on client development and category growth, and has spearheaded Webloyalty's retail and multichannel client engagement strategy since joining in 2010.

Webloyalty is a leading provider of online savings programmes designed to help companies build stronger, more profitable relationships.

Image: H&M Facebook