January 1st: many greet the New Year’s holiday with a sense of hope and renewal. All can agree that it is the indisputable first day of a new year. But is it always? Those who use the 4-5-4 calendar might have a different experience.
Consider retailers. A massive portion of retail sales occurs between Thanksgiving and the New Year each year, to the tune of an estimated $720 billion in 2018. Therefore, a massive portion of retail returns and markdowns occur within the calendar month of January. As a result, many prominent retailers orient their fiscal calendars to be based upon calendar February in order to keep returns and markdowns from impacting the new year’s bottom line right out of the gate. However, this is not the only way retail calendars differ interestingly from the Gregorian calendar.
How the 4-5-4 calendar was created
The precursor of the modern retailer calendar was developed in the 1930s. The calendar’s format was conceived to standardize the number of weekends in a recorded month since weekend sales (even in the early 20th century) accounted for a disproportionate amount of retailer revenue. It is now widely known as the “4-5-4 Calendar”. Named for its standard quarterly format–a four-week month, followed by a five-week month, followed by another four-week month. This format is standard for each quarter in every year, with a single notable exception…
Standardizing a year into neat 28 or 35-day months for a clean 52-week retail year is quite an attractive and convenient concept until one does the math. Here’s the problem: 52 7-day weeks only amounts to 364 days total, offsetting a theoretical retailer calendar by a day each year until, eventually, a retailer ends up with a 53-week year. An infamous and perhaps irritating problem for someone working in the retail sphere.
How retailers deal with the infamous 53-week year
Retailers deal with this issue in a number of different ways when it comes to year-over-year reporting. Some retailers take each week of the 53-week year and push it back a number for comparison. For example, week 53 is compared to week 52 of the previous year. Other retailers ignore the 53rd week entirely when comparing, by analyzing only the first 52 weeks for each year. Still others (in Walmart reporting, for one) compare the 53rd week to the first week of the same year rather than any week in the previous year. I.e. WM Week 201953 is compared to WM Week 201901).
Each of the mentioned options holds valid pros and cons, and each retailer (and sometimes buyers within retailers!) uses different methodologies to compensate. The important thing to ensure in a 53-week scenario is that everyone within a vendor organization is on the same page and everyone is aligned between vendor and retailer stakeholders. This reduces stress on the vendor and mitigates frustration when sharing insights internally and with retailer stakeholders.
Generally, many of us may take a calendar for granted, but if the standard 4-5-4 retail calendar is any indicator, the most seemingly mundane forms of timekeeping may have the most interesting history and may pose the most interesting problems to mold into insights.