seasonality - introduction
Seasonality refers to fluctuations in output and sales related to the seasonal of the year.
For many (or even most products) there will be seasonal peaks and troughs in production and/or sales.
In some cases there will be fluctuations over the week or even within the working day but the time based fluctuation that produces the greatest problem concerns fluctuations related to seasons of the year.
Demand or supply?
We should distinguish between seasonality of demand and seasonality of supply.
Products whose production is affected by the weather and the cycle of the year can be subject to seasonality in supply.
The main examples of seasonality in supply relate to agricultural, horticulture and related activities.
If production takes places in the open then seasonal changes will have an impact.
But manufactured products and services are produced indoors and supply is not affected by the seasons and the weather.
Supply of manufactured goods and services is little affected by seasonal factors. But demand for these goods is subject to seasonal fluctuation.
In some cases it can be explained in terms of culture and customs e.g. religious festivals.
In other cases the seasonality can be explained in terms of the weather.
Obvious examples of products with highly seasonal demand include:
- Christmas cards
- Valentine cards
- Easter eggs
- Sun lotion
- College textbooks
- Winter clothes
- Summer clothes
- Back to school clothes
Less obvious examples of products with seasonal demand include:
- Demand for slippers peaks in the run up to Christmas
- Demand for strawberries peaks in the period around the Wimbledon fortnight
- Demand for plants at garden centres is linked to the planting season
- There is high demand for decorating materials before the Easter weekend
- Demand for electricity and gas rises in the winter
- High street retailers such as M&S rely heavily on the Christmas period. Up to 25% of sales occur around Christmas
- Many theatres take a similar proportion of their income during the Christmas pantomime season – hence the desire to sign up UK and Australian soap stars
Example of induced seasonality
- Car registration induced a distinct seasonal pattern to sales of new cars
- Each year, from 1st August onwards, new cars were given a new registration suffix
- The purpose was to introduce some transparency to the market so that the age of the car was clear to all concerned. But it produced an unfortunate effect
- Sales of new cars slumped in the spring and early summer and a high proportion of sales were concentrated in August
- This was an example of seasonal fluctuation as an unintended by-product of a bureaucratic decision
- As it distorted the market in new cars the practice was abandoned
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