1) Spot the heat
Cabbage Patch Kids caused it in Canada; Beanie Babies caused it in the United States. This is the compulsion behind a Christmas present fad and the frenzy that occurs if the stock runs low. While every retailer hopes to guess what will capture the public imagination this season, research can make that guess lean more toward a certainty.

"They've got to figure out who is their target customer and keep an eye on them," says John Williams, a partner with JC Williams Group in Toronto, ON. Williams suggests attending trade shows, subscribing to magazines and other services that give you information about what customers want. From those sources, you can discover clues to the popular seasonal sellers.

2) Get the worm
After the homework, it's time to order what you think customers will want to buy. Every industry has ordering deadlines, so factories can plan ahead for production schedules and quotas. You must order early to ensure those must-have gift items are shipped to you in time.

Never invest your entire spending budget on one or two things, even if research reveals they are certain to cause frenzied shopping. Williams recommends saving some space and money for any last-minute items or to order more of your top sellers, if you can get them.

3) Move that stock
With time and money invested into these items, you need to sell them, quickly. Start early, shortly after Halloween: put the Christmas items out front and give them prominent shelf space. "If something is doing well, keep adding to it, buy it in greater depth, and build it up inside the store and move it up to the front, advertise it, and get the staff behind it," says Williams.

The biggest mistake small retailers make is ordering too much and waiting for it to sell, says Williams. Recognize the mistake early on, within two weeks, he advises, and mark down those goods until they're gone. While taking a loss is painful, the money sitting in those goods could be reinvested in outstanding sellers.

4) Trends up front
Trendy items have a shorter life span, so order them early and get them out of your store as soon as possible. The last thing you want is a stack of New Year's party supplies taking up space in mid-January. Display trendy stock, along with your best-sellers, at the front of the store for easy access.

5) The right staff
With all this merchandise flying out the door, you'll need people to help with sales. December is not the month to hire and train new employees. That time and energy is best spent elsewhere during the busiest retail season of the year. By December, new employees should know your store, its merchandise, and how it runs so they can easily handle those holiday shoppers.

6) On the hunt
In the days following Christmas, retail remains pretty busy with bargain-hunters or people spending Christmas gift-cash. Any seasonal items must be marked down until they are gone; otherwise they might sit in your stock room until next year, when they still might not sell.

"Some stores actually go and purchase manufacturer's clearance for after Christmas, so they can have those sales. They aren't marking down their own merchandise, but use high mark-ups from this merchandise," says Williams.

Following the rush, consumers do run out of money or they need to start paying those Christmas bills. This is the time to start promotions and marketing to give your customers a reason to come back into the store.

7) Dear Diary
As soon as the Christmas season ends, sit down with your staff and look over the successes and failures. You should question why some things worked and others didn't. Was it simply a bad choice that no one wanted? Or was it hidden in a corner of the store? Retail software that itemizes sales can help you understand these issues.

After a thorough analysis with staff, you should be able to move forward and make decisions about what to order for next year. You still have to continue your research and attend those trade shows to enjoy recurring holiday success.