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Demand seasonality
What it is
Categories whose demand concentrates into part of the year - construction pausing in the monsoon, cooling products selling in summer, agricultural inputs following the kharif and rabi sowing windows, leisure peaking in school holidays
Fixed costs run all year against revenue earned in a few months, and the channel typically carries inventory into the peak
Impact on industries
- Fixed costs, interest and staff run through the lean period against sharply reduced revenue, so annual margin depends on a few weeks trading well
- A weak or delayed season cannot be recovered - the demand does not defer to another month, it disappears
- Channel inventory is built ahead of the peak, so a poor season strands stock with the distributor and depresses the following year's ordering
- The pattern is predictable and therefore plannable - maintenance shutdowns, capex and working capital cycles are all timed around it