The Retail Trading CalendarNov 18, 2020
Of the many moving pieces that make up the “Retail machine”, it might come as a surprise that a simple calendar is the foundation that anchors and unifies everything. We are talking, of course, about the Retail or Trading calendar, AKA the 4-4-5 or 4-5-4 calendar among those in the Retail know.
Wait a minute, the what-what-what calendar?
We know about the regular (Gregorian) calendar – that runs Jan to Dec, and shows weekends and holidays.
We know about a Financial Year calendar – that runs from start July to end June (in Australia), and lines up with tax reporting.
We know about Events and Marketing calendars - that track promotional and market activity.
We especially know about Advent calendars – where we get to eat chocolate every day for a month!
So, what’s this new one, and WIIFM?
Well, it’s actually a little stroke of organisational genius, that many Retail businesses rely heavily upon.
In simple terms it standardizes the year.
What does that mean? Let’s consider for a moment, the Planning dimensions of Location, Product and Time …
We know it’s important to measure comparable sales (Like for like) based on store footprint or store count (comparable Location).
We typically compare the product offering with previous ranges, and supporting events and marketing activity (comparable Product).
We know in Retail, that there are important trading patterns across the days of the week, and associated consumer behaviour.
But in a regular calendar, time is not standardised. The number of days in the months vary, and every month can actually start on a different day of the week!
This makes it almost impossible to compare performance across time, because there are just too many inconsistencies.
And that’s where the Retail Calendar comes in.
How does it work?
Every week starts with the same day (usually Sunday or Monday), every week is the same length, with the same number of days, in the same pattern.
The months are 'equalised too', being either exactly 4 weeks or 5 weeks long in a consistent and predictable pattern, that is the same as the previous year.
The weeks are 'numbered' 1 to 52, so from year to year, you can just compare the same weeks. i.e. week 32 is always week 32, regardless of the date. So clever!
So why should you adopt a retail calendar?
Apart from the obvious benefits already listed above around making like for like comparisons to last year super easy, there are lots of other benefits too:
Equalising the months and the weeks makes comparisons from month to month easier too, as performance can be broken down in to weekly averages. i.e. a 4 week month can be compared to a 5 week month with more context when broken down to an average per week, rather than comparing March (31 days) to February (28 days) for example.
It helps everyone speak a common language and get on the same page – planning, buying, production, marketing, supply chain, finance, operations and VM are all synchronised, which facilitates planning launch dates, critical paths etc
It can have a smoothing effect eg if NOV is the biggest month of the year, making it 4 weeks rather than 5 spreads the load and makes steps ups and growths less extreme
There are a couple of clauses to be aware of ...
This is not a ‘real world’ calendar, so we need to make sure we do some reality checks:
The initial implementation may be challenging if you are not familiar with working this way, or others in the business are not. It's quite a big adjustment really when all we have ever known is the yearly calendar, so just be patient and perservere.
Alignment to Finance calendars may vary per business. Often the Finance team will still keep working to the yearly calendar, reporting from the 1st until the end of the month. It can cause some friction, but it's not a game ender. There may just need to be a reconciliation step between the Planning numbers and the Finance numbers at the end of the month.
The 7 year itch. Every seven years or so, we need add a 53rd week to realign to reality or things start getting really out of whack and that doesn't really help anyone. When that time comes there are a few things to consider re: mapping of LY for reporting. Again not a game ender, it can be easily applied if everyone is clear on the implications.
Don't let the fear of the unknown hold you back
It may seem complicated and daunting, but like so many things, it’s actually pretty simple, but also pretty powerful.
Once you’ve tried it, you'll wonder how you ever operated without it, and you’ll never look back (well, you will, but only for comparable purposes 😉)
For even more information on the Retail calendar, and to download your own free copies for FY19 - FY22, join the Planning POD here. It's our free resource centre for everything Merchandise Planning.