For us, this week before Christmas is good, but it is the week after that is huge.
Forecasting is a crucial skill to develop. It is what allows you both to be ready and take advantage of the business that is available to you and, at the same time, to control costs. I try to understand what the variables are and understand how we are trending. For day to day forecasting, I look at:
- Long term pattern. With 14 years history, I am able to see how our year/season progresses. Year after year, the larger patterns are consistent. The variables inside the pattern are not so hard to understand. Weather, economy, promotional activity.
- Short term past performance. I use 7 and 14 day rolling numbers to understand how we are trending compared to the previous year. I have notes regarding unusual orders, dates of promotions etc to remind me of variables in the previous year that might have moved the numbers.
- Recent performance. Without a specific reason to change my view, if we are trending up 10% to last year for the same period in the last 2-3 weeks I am going to assume next week will also be 10% up. In other words, I am not looking at how much this week is going change from last week. I am looking at how much last week changed from the same week the year before and assuming the change for this week will be similar. If I have a reason to adjust that due to specific information such as a promotion we are doing this year or one we did last year that is not being repeated, I will take that into account.
Over the holidays, I find that proximity to the holiday is important. At other times of the year, I compare Friday to Friday the previous year. During the holiday period, I also look at how many days before or after Christmas/New Years. When Christmas falls on a Sunday like last year, the Christmas Eve and New Years Eve business is going to look more like other Christmas Eves and New Years Eves than like other Saturdays. When the holidays fall on a later weekday like Wed or Thursday, the weekend before is not much impacted because most people will be working Monday etc where with a Tuesday holiday like this year most people have Monday off making the weekend part of the holiday.
What I expect this year? I think that we will see a Friday about like last year (two days before the holiday) and a significantly better Saturday and a better than average Sunday. For us, the period between Christmas and New Years has very little to do with what day of the week it is except at the end. When the holidays fall on a late weekday like Thursday or Friday, the business stays strong right through New Years and the Saturday after as people do not go back to work until Monday. With a Tuesday holiday, I expect that many guests will head back where they come from New Year’s eve and New Year’s Day producing a steeper fall off.
I will compare the rolling 7 and 14 day totals against last year to make sure they make sense in light of our recent trends. If they are not similar and I can not explain to myself why they would not be, I go back and make adjustments.
