You may feel it’s too early to talk about Christmas, but when Selfridge’s, one of London’s biggest department stores, has already launched its festive offering, perhaps you should think again. Now is the time for retailers to turn their minds to tinsel, turkey, and Yuletide inventory. The busiest time in the retail calendar takes some serious planning, and small businesses should act now to avoid being left behind.
Small Business Scrooges
Smaller retailers are notoriously less organised than their larger peers when it comes to planning for the winter shopping rush. Just one in four SMEs has a sales strategy to boost their business in December, according to research from Lloyd’s Bank. Surprisingly, most feel Christmas makes no difference to their business at all, despite almost £76 billion being spent in the UK during the festive season last year. Make no mistake – smaller vendors lose business to their bigger, more organised rivals as a result. Whether you’re a bricks and mortar business or operating online, having a bumper Christmas period is down to more than chance. Being prepared – choosing stock, planning logistics, managing cashflow, and organising promotions – will translate into more custom and sales later in the year.
E-commerce Early Birds
A major factor affecting the retail industry in recent years has been the shift to shopping online. About a quarter of UK Christmas spending was via the internet last year, according to the Centre for Retail Research, and roughly a third overall was done using a mobile device. The message is clear that small retailers should have an online presence, as we’ve discussed before, and one that’s fully transactional, mobile-friendly, and robust and ready for the Christmas onslaught. Offering a click-and-collect service, where shoppers buy an item on the website, but collect it in person in store, is also an increasingly popular option.
However, another side-effect from the move online has been more people buying presents early, as they shop around for a deal, and allow extra time for delivery. The so-called Christmas creep is the result, with promotions having edged from mid-December back into the autumn. Black Friday is the most high-profile discounting event, taking place in late November, but many retailers are advertising Christmas offers far sooner. And consumers don’t appear to mind – about one in three UK shoppers starts their Christmas shopping as early as September, research shows.
The Price Is Right
So, you want to market your business early, but what’s the most effective way to win Christmas customers? Price promotions are the most eye-catching method of attracting attention, and this price-cutting approach is one of the most popular among smaller retailers, Royal Mail studies have found. But it’s essential to pitch sales prices at the right level to gain the maximum effect in terms of units sold, profit made, and the longer-term impact on the company.
Ask yourself: how much do I need to charge to make a profit once all other costs, such as raw materials, labour, and overheads, have been taken into account? Also, consider whether dropping the amount charged for goods will make it difficult to revert to the original price point once the sales season is over. Aggressive discounting can be damaging to a business if it makes it appear downmarket, so think about reducing a select number of items rather than introducing price cuts across the board. Some retailers found they lost money in the frenzied Black Friday sales, for example, so assess which reductions will attract custom without eating into profit margins.
Planning events in the run-up to Christmas is another marketing tool to attract punters. Extended opening hours in the days, weeks and even months before Christmas could catch more trade for bricks and mortar businesses. Be proactive, contacting fellow business owners in your area to suggest a late-opening evening to promote all of your enterprises. German-style Christmas markets have been a growing phenomenon in Britain in recent years – more than 160 are planned across the UK this winter – and these pop-up retail events can boost the sales of permanent retailers in the vicinity. Find out if a market is planned for your area this year, and contact organisers to see if you can work with them, and be included in their promotional efforts.
What about rewarding loyalty by offering regular customers discounts in the build-up to Christmas based on money spent throughout the year? A reward card or online loyalty scheme not only ties customers closely to you, but you can also harvest contact details for future marketing efforts. Which leads to old-fashioned advertising. Studies suggest many shoppers still respond very strongly to promotional leaflets through the door or email marketing when deciding where to spend their Christmas pounds. Start thinking now about what to offer, and exactly when to launch your festive promotions. People with children, in particular, are more likely to be shopping very early on, so weigh up whether this may affect the key dates of your marketing plan.
Stock, Storage, And Shipping
Of course, Christmas won’t be Christmas for retailers without stock. The challenge is to avoid overstocking – an expensive mistake to make – while still having enough to meet demand. If your business has been operating for some time, study previous festive trading periods to see exactly what sold and in what quantities. What was left over? Think about your market, any current trends, and ask customers what they expect to spend money on in the months ahead.
Talk to suppliers about what discounts are available if you order well in advance, as well as arrangements over storing stock until you need it. Where to put extra seasonal goods can be a real logistical problem for small retailers, but wholesalers and suppliers often have some deal for space-starved customers. Speaking of logistics, business owners should also plan ahead for delivering Christmas orders, particularly online retailers. International orders are likely to come through early, but will also take longer to reach their destination. Ensure delivery times are clearly outlined, and that you have a good, reliable delivery firm to get your goods to the buyer in one piece, and on time.
Finally, as is true at all times in a business, cash is king, so think about what demands may be placed on your cashflow by the need to order extra inventory, hire more staff to cover the Christmas period, and also during the lull before the festive rush. If you realise there will be a financial shortfall, make provision early on, whether it is seeking a short-term bridging loan of the type offered by Boost Capital, extending your overdraft, or looking at options offered by factoring and invoice finance companies. Christmas really does come earlier every year, it would seem, but even though the sun is shining outside, planning now will mean retailers have more to celebrate come December.