How did the 4-5-4 calendar originate?
With our planet taking precisely 365.24255 days to orbit the sun, creating a fairly weighted and mathematically pleasing calendar was always going to be a challenge. Julius Caesar came close when he replaced the lunar- and solar-based Roman calendar with his new Julian calendar. This system consisted of 11 months with 30 or 31 days, then February with 28, plus an extra day every four years – very close to the Gregorian calendar we use today. Our 28-day February is based on the predecessor to Julius’s model, introduced by King Numa Pompilius for reasons relating to ancient Roman superstitions. Pope Gregory XIII made only minor adjustments, primarily to the leap year rule when he installed the Gregorian calendar. Some 400 years later, this is still the calendar most of us use to organise our daily lives. While civilians have grown accustomed to months starting on different weekdays each year, this unpredictability can cause issues in the corporate world, particularly in retail.
The 4-5-4 calendar model was first introduced in the 1930s and was robustly embraced by retailers throughout the 40s. A key problem it addressed was the uneven number of weekends in each month. By this point, retailers were aware that customers shopped more on weekends than weekdays, making sales reports from months with five weekends significantly rosier than ones with four. By standardising the retail calendar and ensuring each sales period began on the same day, businesses found it easier to track trends, compare data across years, plan marketing strategies, and manage payroll and leave schedules more efficiently.
What does a 4-5-4 calendar look like?
Like a regular calendar, the 4-5-4 retail calendar divides the financial year into 12 ‘months’, however, these are further arranged into quarters, with each quarter consisting of a four-week month, a five-week month, then another four-week month. The calendar typically begins on the first Sunday of February and ends in January. This arrangement ensures that the same days of the week always align with the same weeks in each year. For example, if you were to take a calendar page for the 4-5-4 retail month of February 2024 and lay it next to one from February 2023, the weekdays would be in the same place as each other, even though the numerical dates would differ. It also aligns holiday periods and big shopping events like Black Friday, making sure that they never fall into a different quarter to the previous or subsequent year, which can affect sales-data comparisons. The 4-5-4 calendar comprises 364 days, resulting in a ‘leftover’ one and a quarter days each year. This problem is resolved by adding an additional week at the beginning or end of the retail year every 5–6 years. Businesses often handle this additional week by discarding it from their comparisons and other processes.
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Advantages to the 4-5-4 calendar
Below, we break down all the advantages of adopting the 4-5-4 for your fiscal year.
- Easy comparisons: by aligning the same days of the week each year, the 4-5-4 calendar simplifies year-on-year comparisons of sales and performance.
- Improved sales forecasting: being able to compare similar time periods can help make your sales forecasting more accurate.
- Precise sales tracking: by standardising months into four or five full weeks avoids trying to track sales over months with varying numbers of days. For example, the first quarter of a traditional calendar consists of months with 31, 28 (or 29), and 31 days, while the second quarter has completely different lengths of 30, 31, and 30 days.
- Aligns seasons and important shopping periods: the consistent structure of the 4-5-4 calendar makes it easier to plan for key shopping periods like the festive season and back-to-school sales.
- Better inventory management: streamlined sales tracking allows for more efficient inventory management, helping you meet demand without overstocking.
- Consistent payroll periods: aligning payroll with the 4-5-4 cycle simplifies payroll management, particularly around holidays. Employees also benefit from knowing exactly when they will be paid, such as the last Friday of every month, eliminating confusion around paydays that fall on weekends.
- Enhanced staffing and budget planning: with predictable payroll cycles, your people department can plan staff shifts more consistently and manage staffing needs better during busier or quieter periods (e.g., hiring temporary workers for holiday periods). Additionally, allocating labour costs throughout the year becomes easier, simplifying budgeting.
Pitfalls to watch out for
There are certain drawbacks to using a different calendar to the standard Gregorian, and not all retail businesses ultimately decide to adopt the 4-5-4. Here are some potential pitfalls to look out for.
- Complexity regarding the leftover day: the 4-5-4 calendar accumulates a spare day each year. Additionally, the Gregorian calendar adds a leap day every four years. Deciding how to manage and incorporate these extra days into your reporting can pose a challenge, and different retailers adopt varying approaches to handling them.
- Atypical financial reporting: because the 4-5-4 calendar doesn’t align with traditional monthly calendars or fiscal quarters, it may complicate financial reporting, tax season and communication with external stakeholders.
- Vendor/supplier challenges: because vendors or suppliers often operate on standard Gregorian calendars, you may experience communication and scheduling issues around deliveries, inventory restocking and payments.
- May not suit small businesses: if you have a small-scale retail business, you may find the 4-5-4 calendar to be unnecessarily complicated, particularly if your staff are unfamiliar with this scheduling style.
- Training and adjustment period: if you are implementing this calendar for the first time, there can be a steep learning curve and adjustment period for your existing staff.
What to consider when implementing a 4-5-4 calendar
If you have decided to go ahead and adopt the 4-5-4, here are a few strategies to ensure a smooth transition:
- Decide how to handle the extra date: if you add an additional week to your calendar every 5–6 years, you may need to determine where to insert it in your calendar. It is also a good idea to decide whether to include it in your reports and other processes or to treat it as more of a ‘throwaway’ week.
- Evaluate the best payroll structure for your business: this involves deciding whether payroll will follow the new 4-5-4 schedule or remain on a standard monthly cycle. If you opt for 4-5-4, it may be easier to shift to weekly or bi-weekly pay periods to align with the new structure.
- Communicate effectively: when making a significant change that affects employees, stakeholders, vendors and other parties, proactive, regular and clear communication help make transitions run smoothly. Encourage open dialogue and feedback between management and other employees during this time.
- Prioritise training: ensure your staff is fully prepared by providing comprehensive training on the new calendar system.
- Software adjustments: updating existing software to align with a non-standard calendar can be a lengthy process and may involve various systems, such as POS, accounting, people-management software and others, so ensure you plan for these adjustments.
- Plan ahead and budget appropriately: any big changes can incur both expected and unexpected costs. Proper planning and budgeting can minimise the risk of financial strain during the transition.
Switching to the 4-5-4 calendar, popular with retailers, can streamline many aspects of your business, from sales reporting to forecasting and workforce management. However, the success of your transition depends on careful planning, system adjustments and clear communication with staff and stakeholders. When implemented correctly, it can boost your sales, help grow your business, make data analysis easier and even enhance employee satisfaction.
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