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How to prepare and organize your inventory for the holiday season

Simplify your labor-intensive tasks this holiday season with five tips on how to prepare and organize your inventory.

Back to BBB's holiday business tips

For small businesses and retailers, the holidays bring peak activity.

The holiday season is a make-or-break time for many businesses, and proper inventory management is key to meeting customer demand without overstocking or running out of popular items.

         

What you'll learn:

  • Why effective inventory management is critical during the holiday season
  • Five actionable tips to forecast, plan, and organize holiday stock
  • How to prepare for post-holiday returns and exchanges
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The importance of inventory management during Q4

Inventory management is one of the most important aspects of any retail business, especially during the busy holiday season. And this year is no exception. Retail sales during the 2025 holiday season are expected to increase between three and four percent, while e-commerce sales are expected to grow by seven to nine percent, compared to 2024.

As such, it is vital to manage your inventory properly to avoid potentially costly mistakes, such as having too many or too few items in stock.

To better prepare for the holiday season and reduce some of this stress, here are five actionable tips to ensure your inventory is ready to handle the holiday rush while maintaining efficiency and trust in your business.

5 tips to prepare and organize your inventory for the holiday season

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1. Build a sales forecast based on last year's data.

A sales forecast is an estimate of how much merchandise you will sell during a specific period. Use historical data and sales trends to forecast which items will be in high demand during the holidays. Analyzing past performance helps you accurately predict stock levels and avoid both overstock and stockouts.

  • Look at last year’s sales data to identify top-selling items and trends.
  • Take note of seasonal factors and upcoming promotions that could influence demand.
  • Use inventory management software with forecasting tools to automate the process and make data-driven decisions.
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2. Create a holiday-specific inventory plan.

Once you have prepared your baseline sales forecast based on last year's sales, it is vital to conduct market research to predict upcoming demand. This will allow you to plan your inventory for the future and avoid potentially catastrophic mistakes.

A well-structured plan helps streamline your operations during the busy holiday season. Break down your inventory management process into manageable steps and assign specific roles to your team.

  • Set clear reordering points for popular items to avoid running out of stock.
  • Create a stock prioritization system that categorizes products based on demand and profitability.
  • Ensure you have a backup supplier plan in place in case your primary supplier experiences delays or shortages.
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3. Optimize your warehouse or storage space.

Efficient use of storage space is critical for quick inventory turnover during the holiday season. Make sure your warehouse or stockroom is organized in a way that allows for easy access to popular products.

  • Implement ABC analysis to organize items based on their value and sales frequency.
  • Place fast-moving items in easily accessible locations to speed up order fulfillment.
  • Use labels and digital inventory systems to track stock levels in real time and reduce picking errors.
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4. Monitor inventory levels in real time.

Real-time inventory monitoring allows you to stay on top of stock levels and quickly address any issues as they arise. This is especially important during high-traffic shopping periods like Black Friday and Cyber Monday.

  • Use inventory management software with real-time tracking capabilities to update stock counts automatically.
  • Set up alerts for low-stock items, enabling you to reorder before running out of key products.
  • Implement a barcode or RFID system to ensure accurate tracking of incoming and outgoing stock.
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5. Prepare for post-holiday returns and exchanges.

The holiday season doesn’t end with Christmas; post-holiday returns and exchanges can significantly impact your inventory. Preparing for this ahead of time ensures you can handle the surge smoothly.

  • Allocate space for returned stock in your inventory management system and warehouse.
  • Offer clear return and exchange policies that help customers understand the process while making it easy for your team to manage.
  • Have a plan for restocking or liquidating returned items, so they don’t clutter your inventory long-term.

5 tips to prepare and organize your inventory for the holiday season

The holidays are a busy time of year for small business owners, and it is crucial that you take the time to prepare your inventory for the upcoming season.

Check out the BBB business news feed for more excellent tips and tricks to help you prepare for the holiday season!

For more information

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