The Sweet Smell of Seasonal Success

The Sweet Smell of Seasonal Success

Category seasonality has always been an important consideration in retail. In recent years, however, we have seen retailers increase their efforts in maximising the opportunities particular events and holidays can bring. Big seasonal in-store displays and merchandising are no longer limited to just Valentine’s Day, Easter and Christmas; it has extended to other events including Halloween, football grand finals and Australia Day, among others.

In pharmacy, however, much of the channel seasonality appears to be driven by factors such as weather. Over 40% of the sales for categories such as cough, cold, sinus and flu medication and throat preparations are achieved between June and September. Likewise, as we move into spring, categories such as allergy and hayfever start to see an upswing in sales. In 2015, 12% of the overall sales for this category were achieved between the middle of September and the middle of October. Closer to summer, sales for sun care products pick up, with the eight weeks between the middle of November and the middle of January accounting for almost a quarter of annual sales in pharmacy.

Although seasonality within the pharmacy channel might at first glance appear to be mainly weather dependent, there are still sizeable event-related opportunities to be explored. The fragrances category is one where the impact of event driven seasonality is particularly noticeable due to the high volume of sales generated over a relatively short time period. The eight weeks leading up to Christmas accounts for around 35% of annual fragrance sales. Other key event-related periods such as Valentine’s Day and Mother’s Day, pale in significance when compared to Christmas, making it a key period to focus on to drive additional growth in this channel.

That being said, the fragrance category in pharmacy is extremely competitive, with many stores discounting well below the recommended retail price in order to drive foot traffic. Overall, pricing is now between 33%-50% of the recommended retail price for many of the top-selling women’s fragrance SKUs, making the pharmacy channel an increasingly attractive destination for fragrance shoppers. Despite department stores having a strong association with fragrance products, everyday pricing in this channel has remained, for the most part, closer to the recommended retail price.

Even for pharmacies that aren’t in a position to heavily discount their fragrance products, the festive season still presents an opportunity to maximise category and store sales by delivering an attractive range at the best price possible. It is also important to ensure staff are well-trained to provide a superior level of customer service to compete against department stores.

Understanding the peaks and troughs in demand that seasonality creates, is key to leveraging the growth opportunities certain occasions can bring to specific categories. Having the right offer and sufficient stock on hand to service customers during these special occasions is critical to seasonal sales success.