What could be more Christmassy than a plum pudding, sitting plumply in its shiny red wrapper on a supermarket shelf from pretty much right now until 24 December? But as it drops with a satisfying thud into the bottom of your shopping trolley, have you ever thought what the maker of that plum pudding did for a living the rest of the year?
One chance for profit
Christmas products, enticing and exciting though they are for a few short weeks a year, have a distinct downside for whoever is selling them, points out Stephen Lawrence, managing director at Christmas Tree World. “The problem with seasonal companies is you’re only using your working capital once a year – and so you only have the chance to make a profit once a year. It is an unbelievable disadvantage.”
As the owner of a garden centre in Cheadle, Lawrence’s family business has grappled with this problem for more than three decades, and have now come full circle in their exploration of ways to diversify out of a dependence on seasonality. Garden centres make most of their their money in May and June, Lawrence points out. So when they opted to try selling real Christmas trees in the 1980s, sales grew to the point that eventually, the business needed to find another product with better year-round appeal.
Thanks to existing relationships with factories in the far east, where by now the company was sourcing lights and decorations to compliment Christmas tree sales, he discovered an illuminated “blossom tree” which for past two years the online shop has promoted heavily to wedding fairs, the hospitality business and even to individual retail customers as a home decoration. Without it, where would the company be now?
“There’d be a significant problem, because our use of working capital would go down,” he says. “The bigger the success of the Christmas trees, the more warehouse space we need and the more skilled staff we take on – and we’d still have to pay for warehouse space and the staffing [the rest of the year]. The blossom trees help us do it.”
But diversifying away from a successful product can be hard to achieve, particularly when your whole concept is based on the Christmas theme.
Diversifying Christmas
Entrepreneur Sarah Greenwell dreamt up Elf for Christmas on her second maternity leave while looking for a Christmas tradition to share with her young daughter. Following a “soft” launch on a custom built website last year – paid for with her savings – Greenwell was stunned at rocketing sales of her Elf toy, a character which sits in a family home making sure that children are good and kind in the lead up to Christmas. This year, after huge interest from major stores, it’ll be stocked in Waterstones, Selfridges and John Lewis: despite that success, she is keenly aware of the need to create a product that will sustain her business throughout the months when nobody wants to think about Christmas.
“It’s always going to be in the back of your mind – you’ve got to evolve the idea, and keep it fresh,” says Greenwell. “And [being seasonal] is always going to be a worry, because you have lots of your eggs in one basket. I think other products will be harder to develop.”
With many having bought direct from her website last November and December, Greenwell might do best by launching further products initially to those customers who have already bought once, says Joey Moore, product director at Peerius, which helps businesses to personalise individual customers’ online experience.
But can you keep going back to a customer, or do you risk alienating people with constant emails urging them to buy again?
Individualising your approach is a great way to nurture existing relationships, says Moore. “Customers want the intimacy that small and medium sized business often do so well,” he says. “And it is very possible to personalise someone’s experience of your homepage, or even at the most basic level, get your website to recognise if they’re a new or returning visitor.”
As a brand new business, Greenwell has had to work hard over the past year to secure a distributor, at the same time as forecasting demand, and developing an updated 2016 version of Elf for Christmas. In the midst of all this, she’s inventing a brand new character that will appeal to children in the New Year when their Christmas Elf is safely packed away. She suggests that there are pros as well as cons to being a seasonal business, and these should not be discounted. “Yes, you might have nine months of no sales, but you know there will be three months when people definitely want your product,” she says. And there is so much to do in the lead up to Christmas that a seasonal business “has to plan well, and use those nine months wisely.”
A 30-year-old business which has just made a significant investment in taking a more year-round approach is the Ultimate Plum Pudding Company based in Cumbria. The founders, nearing retirement, decided to employ a new general manager this year with a specific brief to diversify their product range. Ian Stansfield, who took up post in March, has already been busy – a new bakery making biscuits and steamed puddings aimed at summer fetes is the first and most natural extension to maximise on the company’s skillset and reputation – and says that new opportunities are partly about building new relationships, but also about telling existing customers about new ideas.
Repeat customers
“You have to do quite a bit of blue sky thinking, and not everything comes off,” Stansfield explains. One initiative that did bear fruit was his decision to take exhibition space at Foodex, one of the largest annual food and drink trade fairs held at the NEC in Birmingham. As a result of conversations struck up at the company’s display stand, the Ultimate Plum Pudding Company is now licensing five products with world famous distillery The Famous Grouse. A whiskey laced sticky toffee pudding, chutney and butter are among five new products in the offing, which Stansfield hopes will help the business break into the lucrative hamper and gift set market, he explains.
“When you’re seasonal you can’t be regimented,” he advises. “Being flexible is key - you get the sniff of an opportunity, and you have think ‘how can we turn it to something for us?’
Spreading interest sparked at Christmas throughout the whole year requires businesses to actively plant seeds in customers’s minds about other services they can offer, advises Rebecca Hurley, deputy head of events for BMA House which hosts parties at Christmas, and aims to turn those enquiries into future business.
“We receive a surge of enquiries around the festive period and use these opportunities to create longer standing relationships with new clients by staying in touch with them and proactively asking them what other events they might be planning,” she explains. “This is a prime time to connect with personal assistants who will be organising 2017 board meetings and AGMs for their bosses, and who may not realise that we can cater for a variety of occasions including meetings, AGMs, outdoor receptions and launches.
Hurley says that there is always the chance that a one-off booking at Christmas could turn into a valuable future booking or recommendation if you nurture the opportunity carefully. “Our motto is, if you don’t ask you certainly won’t get the work!”
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