Inventory Management During the Christmas Retail Season
Table of Contents
Every year, the Christmas season brings new challenges and opportunities to retail businesses. For companies operating on a B2C model, for instance, holiday sales usually bring in a major portion of annual revenue, which makes proper seasonal planning absolutely essential.
Yet, 2025 sets a new precedent for uncertainty. The US–China tariff war is having far-reaching impacts, influencing the global economy well beyond just the US and Chinese markets. We'll discuss that impact a bit further on. Let's start with how companies should—and do—prepare for the Christmas season.
Planning for Christmas really starts long before the festive rush is in full flow. Inventory planning often starts as early as June or July, in direct response to longer lead times and increasing volatility in both international shipping and the reliability of suppliers. Much of this unpredictability can be traced back to the aftereffects of the COVID-19 pandemic. This makes it all the more important to prepare well in advance, especially regarding longer supply chains, such as those concerning Asian countries in general and China in particular.
Early communication with suppliers and negotiating conditions well in advance means the right stock will arrive on time, and you get priority access to bestsellers. If you don't order early enough or plan late, you're more likely to face limited product choices, increased unit costs, and reduced negotiating power with your suppliers.
It's also important to remember — even European suppliers need time to prepare sufficient manufacturing capacity for holiday runs. Early engagement is therefore key everywhere. Don't forget to evaluate your own financial resources as well: how much inventory can you really order, and will it need to arrive in stages?
When does the preparation start?
June - July: you should be working on stock planning, analyzing previous sales, determining how much to order, and researching financing options. Lock all this down before making your first orders, so you know what purchasing volumes to discuss with suppliers.
July - August: begin placing initial purchase orders. Inform your suppliers of your required quantities and timelines, and inquire about any holiday closures. Many manufacturers in Europe shut down for the holidays.
September: goods' arrival and time to get the warehouse ready. Inspect incoming products, organize warehouses or storage spaces, arrange seasonal staffing, and test order management systems.
October: campaign planning and final checks. Confirm your advertising schedule, and re-check market trends for any signals that forecasts or consumer preferences might be shifting. Communicate final shipping cutoff deadlines to customers.
November - December: peak season. Launch the biggest sales, monitor inventory in real time, respond promptly to shifts in demand by adjusting the order or restocking if possible, and get ready for post-season returns.
Inventory Planning Timeline
Biggest Success Factor: Inventory Planning
Forecasting how much stock you’ll need for Christmas is far from easy, but ultimately, your entire holiday readiness hinges on this step. Even if we’re devotees of TOC buffer management, seasonal and promotional peaks inevitably require forecasting. To do it well, look wider than just last year's sales:
Analyze the annual sales trends and establish a growth coefficient reflecting actual changes in demand.
Consider how often you ran short, especially during the peak holidays. Treat stockouts as lost sales: how much could you have sold with better availability?
Did you have substitutes available, and did the customers accept them or walk away?
Assess the market both locally and globally, think about inflation, rising costs.
Did new competitors come into the market and affect your sales?
The formula most commonly used for calculations is:
Order Quantity = (Forecast Sales for the Period × Growth Coefficient) + Safety Stock Buffer
Your growth coefficient should reflect the actual market conditions. If your year-over-year sales are growing, you can probably expect the holiday trend to hold. In such a case, you could afford to plan for higher stock, provided your merchandise remains relevant post-holiday. But for products whose value is only during the Christmas period, the coefficient should be conservative.
Safety stock comes into play if your supply chain is unstable or you're vulnerable to shipment delays. Use a safety buffer if you can restock mid-season, but if no restock is possible, safety stock offers little help if your initial shipment is late. During uncertain times, start earlier and negotiate prices with suppliers before the main rush begins.
Calculating Holiday Inventory Needs
One-Time versus Staged Seasonal Restocking
Ordering everything at once means a big initial investment and more working capital that is tied up for months. You’ll also need extra warehouse space. Many businesses, especially the smaller ones, default to a single large order in order to get better pricing or to meet MOQ (minimum order quantity) requirements, then sell through what they have.
If you can restock midseason, then you can hold less inventory in the warehouse, tie less cash up, and better optimize space. This process is quite often more efficient from an inventory management point of view and reduces many risks.
The Importance of Technology in Managing Seasonal Inventory
It can be a challenge, but technology makes all the difference. Modern inventory management systems offer a host of capabilities in managing seasonal fluctuations that include the ability to scale buffers for anticipated demand spikes. These systems automate adjustments, so after the holiday rush, buffer levels drop back to normal and prevent an inflated stock level from skewing future replenishment logic.
However, don't roll out a new inventory system right before the holidays. Consider implementation only after the season is over, when operations have gone back to normal, and you have time to analyze what worked or needs improvement.
This Christmas season of 2025 is shaping up to be unlike anything in recent memory, certainly for those companies that rely on a complex and international supply chain. The US–China tariff war ripples through the global marketplace, not just in these two important economies but throughout Europe and the UK. Mostly indirect in the case of the EU and not the result of specific tariffs, there is an impact on supply chain flows. As the analysis by the ECB notes, US–China trade disputes are pulling down the growth of world trade and dampening demand in the eurozone.
In the US market, things are even more volatile: only about 25% of consumers started holiday shopping by October, down from 35% last year, and are hunting deals. Lead times have lengthened significantly, so early planning is non-negotiable. Many companies placed bigger orders mid-2025 to beat possible tariff hikes, but that kind of bet adds inventory risk—there's potential for both excessive stock and cash-flow issues if consumer demand slumps or costs rise.
2025: A Different Year for Global Retail
In mid-October, the US announced 100% tariffs on Chinese imports effective November 1. This effectively doubles landed costs on many consumer goods. Small retailers—especially those whose main inventory comes from China, like toys, electronics, and apparel—are facing higher costs. They have to choose: absorb the cost and reduce their margins, or increase prices and risk losing customers.
Even large chains aren't immune. Analysts predict that in 2025 fewer available products, smaller discounts, and more early clearance sales, so companies can move inventory and free up working capital.
Meanwhile, consumers are acting cautiously. Surveys show 80% of holiday shoppers are concerned tariffs will increase prices, and 70% plan to purchase fewer gifts should prices go up. Most of them will wait and observe. Yet, at the same time, the season now starts earlier than ever-more than two-thirds said they'll start before Black Friday. In short, retailers are seeing more deal-hunting, cautious, value-driven customers.
To soften the blow, companies are rerouting shipping, relying more on rail, and moving more production closer to home-e.g., Mexico or Vietnam. Many are narrowing slow-moving product lines to boost margins. A tighter assortment makes inventory management easier-but it means less choice for shoppers. The bottom line: expect 2025 to be a year of tight supply and lower margins.
US Holiday Retail Conditions in 2025
fluentSTOCK is a professional inventory management tool that allows you to plan inventory in advance, automatically creates purchase orders for suppliers, tracks order fulfillment, and helps you restore inventory levels after the end of the season.
Want to know how fluenSTOCK can help your business? Get in touch.
