Extending the Christmas Season: Retailers Think Consumers Are Crazy

Keep Christ in Christmas and enjoy the season

William S. Cody, managing director of the Jay H. Baker Retailing Initiative at Wharton, says retailers have pushed the holiday season sooner and sooner for one simple reason -- to try to boost sales. "Holiday sales represent, for most retail formats, between 20% and 30% of annual sales, so it's the most important time of the year," Cody says. "The key to success in the holidays is to be very aggressive: [getting out] of the gate earlier and earlier because you covet these profits and you want to be out in front. In 2003 and 2004, we have seen the season creeping up earlier, and those two years have been successful in terms of year-over-year sales."

Herb Kleinberger, a partner and retail store practice leader at IBM Business Consulting Services, says that some individual retailers may enjoy higher sales by extending the Christmas season but notes that a longer season may largely be a wash for the industry as a whole because there are only so many shopping dollars to go around.

"I don't think retailers are really benefiting," Kleinberger says. "Dollars are limited. There are too many stores chasing too few customers. It's a market-share game. The game may be won by starting early, but extending the season doesn't create more business for everybody. It just allows some retailers to get a jump on getting their share of spend."

Kleinberger says the retailers that may benefit from a longer season are those that stock unique products or items that are hard to get because they are in short supply. Other potential beneficiaries of an extended season: retailers who simply offer the deepest discounts for products generally in demand.

"At the end of the day, you're trying to maximize profit, not just sales," Kleinberger notes. "Promoting deep and early is a way to drive traffic and some early business, but it may not be profitable." In addition, some consumers may be put off by a too-early holiday season. "Jumping the gun too soon can create an emotional pushback," Kleinberger adds. "In a certain sense, the consumer has to be emotionally ready to shop, and that may not happen until the weather [becomes colder]."

For his part, Wharton's Cody says a backlash will occur only if stores fail to deliver the goods to their customers. "In general, retailers need to deliver on what they're promoting. If it's early November and they sell out [of a given item] they may shoot their whole holiday season in the foot. If I want to buy a DVD player and it isn't in yet, I may not come back to your store for the holiday season. If I'm shopping in early December or late November, that DVD player had better be on the shelf if you're advertising it.

Outside of the merchandise itself, execution is the most important thing a retailer can do. Execution is of the utmost importance early in the season. It's the halo effect. If you do well on Black Friday, or earlier in the season, that's a great indicator how you will do the rest of the season."