Moving Seasonlity vs Fixed Seasonality in Demand Forecasting

While doing demand forecasting for retail and e-commerce, the consideration of holiday seasonality is crucial for accurately predicting and understanding patterns in demand over time.

Here’s how holidays specifically affect demand forecasting in retail & e-commerce:

• Seasonal Spikes in Traffic and Sales: Holidays like Black Friday, Diwali, and Christmas result in substantial spikes in online & offline sales for retailers
• Promotional Campaigns and Discounts: E-commerce/Retailers often run promotional campaigns, offer discounts, and introduce special deals during holiday periods to attract customers
• Last-Minute Purchases: Holidays such as Valentine’s Day or Mother’s Day are associated with last-minute gift purchases
• Product Seasonality: Some holidays coincide with specific product categories or seasonal trends. For example, Sales of chocolates and gift packs observe a spike during Rakshabandhan & Diwali festival in India

Two common approaches to model holiday seasonality are predicting moving seasonality and fixed seasonality.

Let’s understand what is the difference between moving seasonality and fixed seasonality?

• Moving Seasonality: Moving seasonality refers to the holidays that change or shift over time. In other words, the seasonality is not fixed to a specific date of the year but changes every year. For Example- Thanksgiving/Black Friday, Diwali/ Rakshabandhan in India.
• Fixed Yearly Seasonality: Fixed seasonality refers to the holidays that doesn’t change or shift over time i.e. they occur at a specific date of every year. For Example- Christmas, Valentines Day, Independence Day

Now, the challenge for demand forecasting arises to identify impact of Moving Seasonlity and Fixed Seasonality and how to predict accurate demand for this year’s Holiday while at the same time avoiding inaccurate spikes based on last year’s Holiday dates.

At TrueGradient, we leverage advanced algorithms to uncover the non-linear interactions between the three aspects of seasonality i.e. fixed holiday, moving holiday and organic yearly seasonality, empowering businesses with accurate demand sensing to meet customer demand effectively throughout the year.

Interested to know more? Reach out to us at info@truegradient.ai for a detailed walkthrough of science behind accurate demand sensing & product demo. 🚀