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Lessons From Christmas Past.

It’s just around the corner. Where did those twelve months go? Christmas. The most important trading period of the year. The highest profit contributing period. The biggest good-will generating period. But what will it be like this year?

As Scrooge found out, the future lies in the past. And this is what we have learned from Christmas past.

First the good news. Christmas retail sales dollars have been up every Christmas for the last decade or so by more than plus 5% – same period this year versus same period last year (ABS All Retail Sales). Expect the same this year. Households spend what they perceive they have to spend and households this year do have the money to spend on the most important family-centred time of the year. They are – as usual – busting for the island of escape and celebration that the annual holiday period affords them.

But there are some lessons in Christmas that seem to be missed every year. The ‘Donut Effect’ is one of them.

Having analyzed Christmas data from ten Christmas periods there is a clear pattern that has developed – and is deepening – of consumers shopping early and late at Christmas. The planners and highly engaged Christmas celebrators plan and shop early. Starting in November they have most of their needs covered by the end of November or the first week of December. Every year this forms a mini-peak and then the tide goes out. The two middle weeks in December fall flat.

Every year retailers panic and cut prices and every year the discounting does nothing to change the behavior of the consumers who will always shop late. It just gives away margin and erodes the good-will of those people who plan early. The reason for this is that the motivation of the shopper has nothing to do with price. It is about time. They are absolutely stretched dealing with their lives and shop at the last minute. Every year.

The later Christmas is in the final week, the bigger the final weeks takings. You can’t change it. But you can work it. Make it really easy and efficient for the consumer to buy and don’t give away margin un-necessarily and you’ll maximize profit.

Differentiate between Christmas and clearance sales. Celebrate Christmas and bring the season to life while making it productive for shoppers and your operations and leave price off for Boxing Day and beyond. Have plenty of ‘stocking fillers’. Create gift suggestions. Pre-wrap presents. Produce gift guides by price grouping. Remember the purchasing trends are to trade-up and trade-down with consumers looking to save money on commodities to splurge on what engages them and adds value from their perspective.

There’s no room for “Bah Humbug” this Christmas. Learn from the past and you’ll enjoy a very Merry Christmas.