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With shoppers expected to spend £29bn this December - £1bn more than in December 2003 - retailers are already battling to claim the extra sales that could make or break their year. This week Marks & Spencer begins its Christmas TV ad campaign, joining Woolworths, Asda, WH Smith, Boots and Bhs, which are already urging shoppers to get off their sofas and onto the high street.

With many retailers deriving 40%-60% of their revenues over the festive trading period, inspired Christmas planning is the difference between a good and bad trading performance.

'Christmas is a massive phase of uncertainty for retailers,' says David Southwell, director of communications at the British Retail Consortium (BRC). 'If they panic and start discounting too early while others hold their nerve, the damage to margins and the bottom line is tremendous. And if poor staffing levels mean people queue for 15 minutes, retailers will harm relationships as well as lose immediate sales.'

There is also the risk of forcing festive spirit on to consumers prematurely.

But balanced against this is retailers' duty to serve the 47% of people who like to start shopping early to spread the cost.

Two-tier strategy

A common tactic employed by Asda, Tesco and Woolworths is to install Christmas aisles or stock specific festive products as early as September, but to delay switching the entire store to a festive format until later in November.

This two-tiered approach is also reflected in advertising. WH Smith was cautious to not be 'too Christmassy' in its current ad campaign, according to marketing director Stephen Clarke. Instead, the retailer is using Bookworm, CD-worm and DVD-worm characters to 're-establish our authority as Britain's favourite book, newspaper and stationery retailer'.

The campaign builds on lessons learned from last Christmas, when WH Smith reported flat sales as a result of a confused and cluttered offer and stock levels being out of sync with promotions. It was a dismal performance for a company that derives 70% of its annual sales from the festive period.

'Unlike summer, when our offer is about books, at Christmas we are in demand across all categories, which makes it the most important period of the year,' Clarke says.

He is adamant that being one of the first retailers to launch a Christmas ad campaign wasn't a deliberate ploy to get customers shopping early in its stores. 'This was the launch of the new strategy, so we needed to get out there with a lot of TV earlier than others.'

But early advertising can pay off if it means the retailer is seen as a Christmas destination store, according to Nick Gladding, senior analyst at Verdict Research. This was the thinking behind Woolworths' decision to start its £20m marketing blitz last week, a full seven weeks before Christmas.

'Our aim is to be famous for kids and celebrations, so we are striving to own Christmas on the high street in the eyes of children and families,' says outgoing Woolworths head of brand communications Mark Trinder.

Critical timing

Christmas accounts for 40% of Woolworths profits, as footfall over the Christmas quarter increases from 7m to 10m, so timing its promotional campaign correctly is critical. To this end, Woolworths carries out year-round research to find out when customers want to start planning their Christmas.

'Success is getting the right products and the right promotional messages at the right time, regardless of what other retailers or the weather is doing,' says Trinder. 'Consistency is vital; TV, press and in-store activity must all carry similar messages and be similar in style to maximise impact. This year's activity is fronted by our duo Woolly and Worth, and all material carries the tagline "The biggest show this Christmas".'

The BRC's Southwell adds: 'By November, retailers turn over about 80% of floorspace to Christmas. In recent years they have learned to change their patterns. Ten to 15 years ago, every weekend in November would have seen an upturn in sales, but timings have shifted.'

Shopping is no longer restricted to weekends. Office workers increasingly use their lunch hour or the couple of hours after work, requiring retailers to stay open for longer.

Research also suggests that shoppers are leaving Christmas purchases until much closer to 24 December. Last year, Mintel found that 12% of adults did not begin shopping until 21 December, which means that retailers must either adapt to the trend or try to change shoppers' last-minute habits. Starting price promotions early is one way to get the customers in, 'but once one retailer does it, there's a often a domino effect that dilutes the impact,' says Mintel retail analyst Neil Mason.

The result is that many consumers are leaving their shopping as late as possible to get a bargain.

Mintel has already dubbed 20 December 2004 as 'Black Monday', the date by which most discounting will have to be started. For retailers, this means the battle for Christmas shoppers' wallets is set to go right to the wire.

DATA FILE - XMAS SPENDING

31% of people plan to spend more on Christmas this year than last.

16% plan to spend over £500 on gifts.

38% plan to spend less than £200.

87% of people will shop on the high street.

30% will shop online.

37% will leave gift buying until the last minute.

47% will start early to spread out the cost.

48% find Christmas shopping a chore.

47% say they 'really enjoy' Christmas shopping.

Source: Mintel.