A Black Christmas

OPINION: I wrote mid-year about the importance of stock.

If businesses get this wrong leading up to Christmas, they will not survive past March 2010, let alone till next Christmas.

To over-stock means cash shortfalls in December and January when retailers have to pay for goods.

Stock, often being seasonal at this time of year, sitting on the shelf after the 25th will mean a huge value reduction and the likely risk of obsolescence.

January sales will kick in, but smart families, including the children, are well aware of the bargains to be had, and that their dollars will go much further.

We live in such a consumer age that kids will happily accept a homemade voucher for a present to be bought after Christmas, rather than a lesser value present on Christmas Day.

And of course, shops that have overstocked may have to offload quickly, so you will be at the mercy of being undercut by someone more desperate than you, and the downward spiral continues.

Remember the customers have had a tough year too, and they will be wary of just putting it on the credit card like they might have in better times; they will be spending slower, smaller, smarter, and want value for money.

To under stock will also spell the death knell. Being Christmas, it's hectic enough on the shopper running around trying to find those last minute presents.

To be told you have run out (because you didn't buy in enough stock) or that you can get it in in a day or two from the warehouse in some other city, just won't cut it; it will be an opportunity lost.

Christmas shopping is about the moment, buying the presents and moving on to the next store; a lost Christmas sale is one lost forever.

If you don't get it right you will surely pay the price; things are tough out there and the Banks won't be able to be so forgiving; they will have no reason to believe you will be able to turn things around if you can't get through what is, by far, the biggest trading month of the year.

So let's make sure that a Black Christmas simply means that you end it with funds in the bank!

Adam Davy is Managing Partner of BDO, Chartered Accountants and Advisers' Wellington Office.