Every merchandiser knows December is make-or-break. The holiday rush dominates calendars and inventory plans across the industry. But after years of watching January performance data, there's a clear pattern: retailers are leaving serious money on the table by treating it like a recovery month instead of recognizing the revenue opportunity it actually represents.

The gift card data alone should change your Q1 approach.

The Gift Card Wave You're Probably Underestimating

Gift cards were the most-requested gift item again this year. December generates the sales, but January turns them into actual revenue. Nearly one-third of all gift card spending happens during these two months combined. The concentration gets even more dramatic in specific categories: toy stores see 38% of their annual gift card spending happen in December and January, with bookstores and health and beauty retailers seeing similar patterns at 37% and 36%.

The timing matters for your merchandising calendar. 76% of consumers use gift cards within one month of receiving them. Digital gift cards get redeemed in an average of 16.8 days, while physical cards take about 35 days. Over half of all gift cards are redeemed within six months.

That first wave of redemptions hits right now, in early January. Most of your competitors have already shifted their focus to spring planning.

Nobody Talks About the Revenue Multiplier

The real power of gift card redemption shows up in what customers spend beyond the card value. The average customer spends $31.75 more than their gift card balance when redeeming. Some studies put that number as high as $59 over the card value. Think about your merchandising strategy through that lens: gift card shoppers walk in with a mindset to spend, often treating the card as "free money" rather than their own cash. They're willing to pay full price for products that catch their interest.

61% of consumers exceed their gift card value during redemption. Most marketing campaigns would kill for that conversion rate, and it's walking through your door naturally in January.

Adjusting Your Merchandising Approach

Successful retailers have changed how they handle January merchandising based on these patterns, with measurable results.

Strategic Product Positioning

Gift card shoppers want products they wouldn't normally purchase with their own money. Position your higher-margin items front and center. Showcase premium products, new arrivals, and full-price inventory that complements sale items rather than competing with them.

This pattern plays out consistently: customers come in planning to spend exactly their $50 gift card value and leave having spent $80-90 because they found something they genuinely wanted at full price.

Building Urgency When the Calendar Won't Do It For You

January lacks December's built-in urgency. There's no shipping deadline, no holiday gathering to shop for. You need to create that momentum artificially.

Limited-time gift card bonus incentives work well: spend your $50 card, get $10 back for your next purchase. Timed product launches create fresh reasons to visit in early January. Make the month feel like a new season rather than holiday aftermath through category refreshes and new merchandising stories.

Clearance Doesn't Have to Dominate the Experience

You need to clear holiday inventory. But successful retailers create distinct zones: clearance sections that address the bargain hunters, and featured product areas that capture gift card spenders looking for something new. The two customer segments can coexist if you merchandise for both intentionally. Don't let clearance overwhelm the experience.

Understanding the New Year Shopping Psychology

Beyond gift cards, January brings shoppers with a specific mindset. They're in "fresh start" mode, which creates natural demand in certain categories.

January shoppers gravitate toward fitness and wellness products, while organization and productivity items see a noticeable uptick. Self-improvement categories like books, courses, and tools consistently perform well during this period, and home refresh purchases climb as people spend more time in spaces they're motivated to improve.

Recognizing that January shoppers are actively looking to invest in themselves in ways they weren't thinking about in November and December gives you a merchandising advantage. Position for genuine needs, not gimmicky resolution plays.

Getting the Inventory Mix Right Takes Planning

The merchandising challenge in January means balancing competing priorities: clearing holiday inventory while maintaining full-price positioning for gift card spenders. You're also preparing for spring at the same time. After observing different approaches across the industry, a few principles consistently deliver results.

Don't slash prices too aggressively in week one. Gift card redemption peaks in the first two weeks of January. Deep discounts during this window train customers to wait for clearance rather than viewing your store as a destination for new product discovery.

Layer in the spring product gradually. A small selection of spring items creates the sense of newness that gift card shoppers respond to, without overwhelming your floor space before you've cleared seasonal inventory.

Use data from December gift card sales to inform January inventory. If you sold significant gift cards in specific categories, make sure those sections are well-stocked with compelling full-price options in early January.

Where the Competitive Advantage Actually Comes From

The biggest opportunity in January requires the least tactical sophistication: simply maintaining your merchandising intensity while competitors coast.

Most retailers treat January as a recovery mode. Marketing budgets shift, new product launches get delayed until spring, and internal planning takes priority over customer-facing initiatives. Meanwhile, you have customers actively shopping with gift cards, "New Year, New Me" mindsets, and tax refund anticipation, creating a willingness to spend.

Retailers that maintain momentum in January capture outsize market share simply by being the only ones with fresh creative, new product stories, and merchandising that doesn't scream "everything must go."

January as a Different Kind of Peak Season

January continues peak season with different customer psychology and competitive dynamics that favor retailers who understand what's actually happening.

The data tells a clear story. Nearly a third of gift card spending happens in December-January, with those customers spending significantly more than their card value when they redeem. New Year shopping psychology creates natural demand in your most profitable categories, while most of your competition has already moved on to Q2 planning.

If you plan for it, the opportunity is sitting right there.