Christmas is the season of warmth, joy and good cheer. It is also big business and a highly anticipated season for retailers. As early as September, merchants start their Christmas and holiday promotions, and the marketing blitz just intensifies as the holiday season nears.
If you love Christmas, one possible business you can start a Christmas decoration business. Christmas is often characterized by the bright lights and festive, and the selling of holiday and Christmas trimmings and décor has become lucrative. The tradition of decorating a Christmas tree dates back for centuries, and over the years has evolved into a profitable business. In recent years, Christmas has become increasingly commercialized – which means it is good for businesses.
How to Start a Christmas Decoration Business
Christmas decoration business is a huge market, encompassing a wide variety of products. It fits with the Christmas decoration, gift/souvenir and mail-order industries. According to IBISWorld Research in their report “The Retail Market for Seasonal Decorations in the US: Market Research Report,” the seasonal decorations market has grown an average of 6.3% since 2009.
Christmas decorations are often used to decorate homes, for gift giving including corporate gifts, as a fundraising tool for charities and organizations, souvenirs or specialty retail items. For the Christmas décor business, there are a number of product categories you can consider, such as:
- Indoor home décor
- Outdoor décor
- Glass ornaments
- Pre-lit Christmas trees
- Florals and foliage
- Licensed products
- Personalized ornaments
- Christmas cards
- Party goods
- Plush items
The first step to starting a Christmas decoration business is to identify your niche and the types of products that you will sell.
Be sure though to find ways to make your products unique. One small business includes the story behind the Christmas carols and the hidden meanings of each of the gifts in their Twelve Days of Christmas ornaments series. Look at the competitors and see what they offer. You may find competitors offering ornaments similar in composition and size to yours, but you can highlight the difference in the materials you use (e.g. 24K gold plated vs. solid brass with gold tones).
There are small merchants who focus on ornaments depicting specific Christmas themes, such as The Twelve Days of Christmas. You can also focus on specific target markets for your Christmas decoration business. For example, you can offer African-American themed product lines.
Customized or personalized ornaments are another big niche in this market. Some create and sell custom-designed Christmas ornaments of solid brass with 24K gold, silvertone and antique brass plated surfaces. There are also companies that offer customization for corporate market, such as adding company logo in the ornaments.
Given that there are a wide variety of products available, some products may provide more revenue than others. The 2014 Holiday Industry Research Report by the Selling Christmas Decorations Magazine found that:
Ornaments reigned as the top revenue producing category for holiday retailers, with 33.8% naming the items as top sellers. Home décor also ranked well with almost 17% of respondents naming indoor and outdoor décor as their best-selling area. Pre-lit trees were tops for 9.2%. Florals and foliage had 6.2% ranking it as number one in sales. Party goods, LEDs and licensed products each ranked highest in sales for 4.6% of retailers. Collectibles were named as the top selling category by 4.6% of respondents and 4.8% named it the strongest in sales gains.
Plan the process of how you will create the products. One way is to find wholesale gift suppliers where you can purchase the Christmas décor products that you will sell, or you can manufacture the products yourself.
Challenges Faced by a Christmas Decoration Business
The Christmas decoration market has a relatively low level of concentration, though the biggest market shares go to big retailers such as Wal-Mart. The market is mostly served by small-to-medium sized retail stores.
However, the biggest challenge in the Christmas décor business is the economy. If the economy is good, customers are more likely to buy and splurge on Christmas decorations. However, when the economy gets tough, sales can be very sluggish and profits are low.
You also need to consider the large seasonality of the Christmas business. Many of the products can be marketed during the months before Christmas. The seasonality factor should play out in decisions on what niches to serve, what markets to target and what products to offer. If your target market is the business sector for corporate gifts, you may be able to start marketing by spring to allow you ample time to produce the designs your corporate clients want. If you are fulfilling custom orders for retail stores, orders can be placed from one year to 8 months before Christmas.
The Christmas business is also price-competitive. Your business is competing against the likes of Wal-Mart that is able to squeeze their suppliers to get the lowest possible prices. One strategy you can use to cut down on costs is to eliminate the middleman or wholesale gift supplier and work directly with the manufacturer. To do this, you can commission a local artist to design your products and look for a manufacturer to directly produce the product.