Why do you start seeing inflatable Santa Claus’ and shiny boxes of tinsel in September and October? And the big box stores and department stores have the Christmas tunes pumping in on certain aisles?
It feels like we as a society celebrate Christmas for at least 33% of the year, maybe longer. (And by celebrate we of course mean spending money on “stuff” to show others how much we love them rather than spending time with them!)
But do you know why those pesky retail executives order the green, red, and gold paper and the repeated Christmas tunes and the lights and bulbs all to be displayed earlier and earlier each year?
It all comes down to sales and revenue.
Percentage of Retail Sales During the Holidays
At the end of the day it all comes down to revenue and profit.
Depending on what type of retail business you are in stores generate between 15% to 40% of their annual sales during the holiday season. In 2011 holiday sales accounted for 19.5% of total retail sales.
Considering that if sales were evenly distributed across the twelve months of the year you would have 8.33% of sales in each month that is an amazing difference.
Those significantly higher revenue numbers during the holidays also indicates that many retailers don’t “break into the black” or “get out of the red” until the holidays.
Can you imagine having run a majority of the year at a loss — completely unprofitable — and pinning all of your corporate hopes, dreams, and profits on a small section of the year? Not to mention you have also likely brought in a lot of part-time holiday help which means higher payroll expenses.
What Period of Time is “Officially” the Holiday Season?
To put the total sales numbers into perspective we must understand what officially counts as the holiday season. The National Retail Federation counts the 61 total days combining November and December as the official holiday season.
So the sales you see in September and October don’t technically count toward the reported holiday numbers. The more revenue the stores can generate during those times just helps make them less reliant on November and December’s sales.
Now let’s go back to our numbers. If the sales were evenly spread out throughout the year, two months of the year would generated 16.67% of annual sales.
So a slight uptick to 19.5% is nice, but again that is the amount for total sales across all retail. For some stores like department stores, the numbers can be in that higher range of 25% to 40% range. Getting 40% of your sales during a two month period is both great and terrifying at the same time.
That’s why retail stores start the Christmas sales so early. They are doing whatever they can to move the needle on their revenue and profit lines. If they can get you in the shopping mood sooner rather than later, that’s what they want.