What Is Christmas in July, and How Can You Incorporate It Into Your Small Business?

Sales like Amazon's Prime Day, Best Buy's Black Friday in July, and Target's Circle Week reflect a shift in how retailers strategize for the busiest shopping season of the year: typically Black Friday through the new year. These so-called "Christmas in July" sales are evidence that more big-box retailers are launching their holiday promotions three or even six months before Black Friday.

The idea of celebrating Christmas in July may sound gimmicky. But it offers a way for merchants to boost sales, clear out inventory, and prime customers to jump-start their holiday shopping sooner rather than later. Small businesses offering holiday specials earlier in the year can battle lagging summer sales, capitalize on shopper intent, and reduce the stress of the peak season sales rush.

Why are retailers embracing Christmas in July?

Christmas may be the last thing on your mind during a heat wave, but there are a few reasons why Christmas in July sales are on the rise.

First, there aren't many sales occasions during the summer. Beyond July 4th, there are no other holidays competing for consumer attention. The timing also blends seamlessly into back-to-school shopping, Katherine Cullen, the Senior Director for Industry and Consumer Insights at the National Retail Federation told Vox.

"[In] a world where customers are trying to spread their budgets a bit more evenly across the year … the month becomes a great time for shoppers to buy products for both the near future and the further-out future," reported Vox.

Consumers can budget more thoughtfully and spread out their spending. And since consumers are more budget-conscious than ever, the response to early season holiday sales is strong. Twenty-four percent of Americans have or plan to start shopping before the end of September.

For retailers, a longer holiday shopping season spreads out demand, helping smooth inventory management, reducing seasonal hiring, and avoiding employee burnout.

[Read more: The Benefits to Early Holiday Merchandising]

What are the downsides to Christmas in July?

Buying fatigue is a real risk when it comes to starting sales early. Consumers may be less willing to spend during the holiday season, depressing revenue for local businesses. Janet Hoffman, Global Managing Partner at consulting firm Accenture's retail practice, also noted that summer promotions may cannibalize back-to-school shopping.

And while many consumers love a discount, that doesn't mean they want to see Santa in a bathing suit.

"Customers don't like it when you push Christmas too early," Mike Boylston, J.C. Penney's Chief Marketing Officer, told The Seattle Times.

However, as more big retailers host sales in July, smaller sellers are incentivized to keep up.

How can small businesses take advantage of Christmas in July?

With the right approach, starting holiday promos earlier in the year can work.

First, consider what products to put on sale and when. Forbes data suggests that over one-fourth of shoppers will take advantage of July sales to get discounts on everyday items they normally buy rather than gifts. Consumers are looking for deals on necessities during this period. Retailers therefore should focus their discounts on day-to-day items and practical purchases.

July is also a good time to put your loyalty program data to work. Rather than offering a 30% discount on products across the board, send specific discounts based on a customer's preferences. Use this information to send targeted, personalized promotions. For instance, incentivize a price-sensitive customer with a steeper discount on the items for which another customer is willing to pay full price.

With the right tools and a considered approach, Black Friday in July can be a good opportunity to capture higher revenue and reduce the stress of the Christmas crunch.

[Read more: 3 Proven Ways to Stay Competitive Without Lowering Prices]

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