Holiday Restocking 2025:
Inventory Ratios, Demand Signals, and the Lunar New Year Effect
Matthew Pavich, Sr. Director, Strategy & Innovation at Revionics
Retailers that concentrate on growing their private-label market share can win big this holiday season and beyond.
Matthew Pavich, Sr. Director, Strategy & Innovation at Revionics
As retailers prepare for another holiday shopping season in an unpredictable economy, the government shutdown is yet another reason consumers are feeling stressed and pressed financially.
On Friday, Oct. 10, many federal government workers received a partial paycheck – their last payment until the shutdown ends. While federal employees and members of the military are feeling a direct impact, the shutdown is also having a sobering effect across consumers in general; it’s yet another factor playing into the feeling of macro-instability in a market plagued by the bite of inflation and tariffs.
Retailers, too, must navigate these uber-challenging economic conditions and rising costs, along with the added pressure of consumer price scrutiny being at an all-time high.
For retailers, the time to act is now. It’s important to triangulate the right deals and products that excite your customers and make them decide to shop with you over your competitors. This necessitates precise pricing and promotion decisions using data-driven insights.
Here are four strategies retailers should lean into:
1. Be smart with value-focused pricing
2. Make the most of vendor trade funds
Retailers need strategies to address the increasingly budget-conscious consumer who is easily swayed to leave their favorite retailer altogether to shop at the discount or club store down the street. But retailers can’t be caught in a race to the bottom. They must be laser-focused on having the right price on the right products that their shoppers care the most about. It’s never been more important to really understand your customers, because margins are so stressed due to tariffs and other factors.
This holiday season, leading retailers will leverage advanced analytics to determine which products their customers prioritize and how that differs by customer segment, region, channel, etc. and will invest aggressively to offer the most attractive pricing on those items.
We have witnessed a big shift as vendor spending moves from trade funds to retail media networks. Maximize limited vendor trade funds by leveraging the best predictive analytics to focus funds on products that will delight customers the most while driving the highest lifts. Savvy negotiation practices and investing in vendor relationships can go a long way toward maximizing your share of trade funds.
3. Pull ahead with private label
We have seen tremendous growth in private-label offerings in recent years, due in part to factors such as inflation driving shoppers to seek more value. Sales of store brands increased $9 billion last year compared to 2023, to a record $271 billion, according to the Private Label Manufacturers Association. Walmart’s Bettergoods, Target’s Dealworthy and CVS’s Well Market brands all launched in 2024 and have been extremely well received.
Retailers that concentrate on growing their private-label market share can win big this holiday season and beyond. This is because private-label brands give retailers greater control over pricing and margins. As a bonus, you might even end up with a cult following like the one Trader Joe’s Candy Cane Joe-Joe’s cookies has achieved!
4. Don’t get left behind with markdowns
Having a savvy markdown strategy is critical to holiday success. The most common mistake retailers make concerning holiday markdown strategy is that they wait too long to begin marking down their products. Waiting until demand has completely fizzled out is not the best way to delight customers, increase capture and sell-through rates, or maximize margin potential. Having a localized, data-informed markdown strategy can be a game changer for retailers, driving better value finds for consumers and ensuring inventory is cleared after the rush.
Dealing Out Happier Holidays for Retailers and Shoppers
With many retailers’ fiscal year performance depending heavily on the October-January time frame, it’s crucial to optimize pricing and promotions to navigate cost structure shifts. Fortunately, AI and analytics are making this task easier than ever before, helping guide retailers to the right pricing and promotions, maximizing the value from limited vendor funds, and delighting customers with deals on the products they prioritize.
As we all endeavor to navigate a challenging economy and rising costs, these data-driven insights can create positive outcomes for both retailers and consumers – a winning value proposition for happy holidays.
Matthew Pavich is the Senior Director of Strategy and Innovation at Revionics, a leading provider of price, promotion and markdown optimization solutions for retailers. With a deep merchant background and decades of experience in retail consulting, buying, pricing and marketing, Matthew has a proven track record of helping companies navigate complex markets to drive profitable growth.