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Christmas retail fails and how to avoid them

The lead up to Christmas is an extremely busy time for retailers, particularly independent businesses. There's a lot to think about - longer opening hours, increased staffing, more stock needed and ways to outshine the competition. Most businesses will start planning for Christmas in July, and as a retailer you've probably already chosen most of your Christmas stock by then too. But even though you're 5 months ahead of the game, when November comes things can change and there are some common Christmas retail fails that can cause cash-flow problems for independent shops and could ultimately lead to insolvency.

Getting too excited about Christmas trends

Remember loom bands, fidget spinners and squishies? These pocket money toys were all huge trends in the UK. So much so that newsagents, greengrocers, clothes shops and supermarkets all stocked up and hoped to cash in on the trends. Unfortunately, because every type of business spotted the trend, there was an abundance of overstock. The businesses that bought in volume may have made some quick additional turnover, but many made a loss because they simply got too optimistic for the trend, didn't foresee the competition and had to sell the remaining stock at rock bottom prices to get rid of it. And what's more, some weakened their brand by stocking "cheap" items when their target audience is in fact a more discerning customer.

Not paying enough attention to Christmas trends

On the flip side, not paying attention to the Christmas trends is not a smart move either. It's important to spot opportunities to bring extra footfall to your store, find extra impulse buy items and to create add-on-sale opportunities to boost revenue. For example, a toy shop and a florist both added a pot of candy canes to their tills, which were 50p each, with a great profit margin and made an excellent stocking filler. While customers were waiting to pay they would often add these extras in with their purchase. And when grandparents with 8 grandchildren do this, it soon adds up!

There are many traditional items that will always be a guaranteed sale at Christmas and make sense to add to your shop if it fits in with your existing product lines - wrapping paper, sticky tape, sweet treats, mailing bags and boxes, stocking fillers, gift sets such as toiletries for example.

Adding a "Gift Wrapping Service"

It may seem entrepreneurial to add a gift-wrapping service to your tills at Christmas to wow your customers with an extra level of service, and to charge a little extra on purchases. However, the practicalities of this are often very challenging for small shops that haven't offered this service before. We have spoken with several retailers who deeply regret offering this service. It does work well in florists, where they are already set up with papers hanging from the wall, a wrapping table and ribbons and tags. But for businesses that don't have this set up, adding gift wrapping to the till can cause chaos. The problems are that some staff will be better at wrapping than others. And trying to wrap something nicely with a queue of impatient Christmas shoppers glaring at you is rather challenging. There's also wastage to consider when things go wrong. If your queues stay too long because the wrapping is delaying progress at the till, you could lose sales.

Failing to work with suppliers

More often than not, wholesalers will run special offers and extend credit terms during Christmas to support independent traders and increase their own revenue. Many wholesalers will offer discounts on large orders or waive carriage charges. Some will offer free gifts such as extra stock items. This is particularly common in the toy trade and means you have free stock to sell at 100% profit. Be aware of what your suppliers are likely to offer so that you can time your large orders to take advantage of the special offers. And if you can extend 30-day credit to 90 days at no extra cost, this will help you to fund larger orders to ensure you have enough stock to meet the demands of your customers.

Ignoring advertising and marketing during busy times

It's tempting to think that Christmas is a good time to cut costs on marketing and advertising because the footfall will naturally increase. Unfortunately, this is no longer the case as a high proportion of shoppers will only shop online for their gifts. You still need to advertise and create a buzz about your shop to tempt people in to your shop. Your online and offline competitors will all be showcasing their offerings so make sure your business is included. Local magazines will be running shopping features, be sure to contact them to see if your products can be mentioned. There will be a lot of special Christmas events - if you have schools or church halls close by and there are going to be Christmas fairs, make sure you're doing something to advertise to those customers - perhaps have a table, offer a raffle prize or put in some flyers at the very least, and extend your opening hours to match the times of these special events.

Late night shopping events also work well, treat customers to mince pies, carol singing and maybe even a visit from Santa.

Forgetting about January

With all the commotion at Christmas it can be easy to forget about January. January is another key retailing period that can be the difference between solvency and closure for some small shops. It's a good time to have a stock clearance sale but also an opportunity to buy in some special offer stock that you can sell at lower prices than normal. There will be more footfall on the high street in January as many shoppers love to hunt out bargains on the sale rails instead of shopping online. Think about your opening hours. We have seen some retailers that decide to reduce opening hours to cut costs and have a break after the busy Christmas trade find that this can be very detrimental to the shop's reputation and will almost certainly result in lost sales and unhappy customers.

Failing to plan is planning to fail

Yes, it's a cliché but it's true. Businesses that don't plan for seasonal peaks and troughs generally miss out on sales and revenue or struggle through the hard times. Our Business Review service can help you plan for cash-flow ups and downs yet stay solvent. Or, if you have been unfortunate and made some retail fails such as those above that have damaged your revenue, cost you money or left you in debt then our Business Turnaround Service can help you get back on track. Contact us for a free consultation.


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