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Monday, 8 January, 2001, 17:00 GMT
Christmas: make or break for retailers
The Christmas period is make or break for many retailers
There may be only twelve days of Christmas but those days can make or break many retailers.

Toy companies and jewellers see the bulk of their sales in December, while most retailers see about 20% of their sales in that month.

December is the time of year that retailers can make good all the discounts they have offered over the previous 11 months by selling in bulk at full price.

Retailers don't know until the last minute how much they will sell

Clive Vaughan, Retail Intelligence

Given last year's tough ride for retailers, many will have been pinning their hopes on the Christmas season.

"It can be make or break. We have already seen it with the online toy retailers. Now is the time that retailers will start to fall over," Clive Vaughan, a director at Retail Intelligence said.

A time of profits

While the British Retail Consortium says December counts for about 14% to 16% of annual sales, others say it is closer to 20%.

Toy companies could make as much as 50% to 60% of their sales in that period, although the figure for jewellers is about 40%.

So far, Hamleys and Electronic Boutique are enjoying the rosy afterglow of a healthy sales period, while jewellery company Signet also brought some late Christmas cheer when it released its trading figures.

"Some of the jewellery companies only make profit in the run up to Christmas," Pamela Webber, an economist at the British Retail Consortium, said.

Retail Intelligence's Vaughan added: "It is also one of the months where retailers are trading at full margins, so it is quite a profitable month."

Changing consumer

Retailers are also having to come to terms with changing consumer habits.

People now defer spending to the January sales, where they hope to buy the same goods for less.

Sunday shopping and longer opening hours have also left consumers happier to leave shopping for presents until the last minute.

Retailers and consumers then wait for each other to make the next move, both sides unsure if customers will turn up or prices will go lower.

"That is so scary for retailers, they are sitting on Christmas stock, their sales histories tell them people buy this in October.

"Retailers don't know until the last minute, how much they will sell. That is one of the reasons they tend to panic and cut prices. it is like a giant game of chicken," Mr Vaughan said.

Cardies are out

So while in popular perception, Christmas may get earlier and earlier, for many retailers Christmas it actually seems to be getting later.

A hasty glance at annual profits of some clothes companies and it becomes clear that Christmas may never have come at all this year for some retailers.

"There are so many jokes about buying people cardies for Christmas. But a lot of people will have bought their Granny a mobile (instead). It is probably a lot more useful," said Mr Vaughan.

Electrical goods are also in demand at this time of year, with people more prepared to make a big spend on DVDs and digital products.

Targeting Christmas

While the Christmas sales period is traditionally strong because it is the present-buying season, it is further fuelled by the fact that some companies schedule their big product launches for that time of year.

This acts as an added draw for customers, who decide to buy the new products for themselves.

Peter Stone, UK branch manager, at Japanese games maker Konami, said: "It is not just a Christmas present market... you have got a lot of publishers targeting that time of year to bring out big releases.

"So, many people are buying games for themselves... the market continues strongly into January as people are sitting at home wanting to do things - so they go out and buy a game."

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See also:

08 Jan 01 | Business
Toys and games firms' festive cheer
27 Dec 00 | Business
Mixed reports on sales
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