Heather Schmidt, owner of the Oakley boutique called the Nest, spent six months picking out gifts and indulgences so that in the few weeks before Christmas, her customers would have plenty to shop.

        Mrs. Schmidt opened the Nest last Dec. 4 and has been preparing for Christmas 2000 all year long. The profits from her first three quarters went into planning and buying the season's merchandise.

Heather Schmidt, owner of The Nest in Oakley. (Tony Jones photo) | ZOOM |

        She just hopes she ordered enough to get through Christmas.

        “It's more of an investment than the initial start-up because I've reinvested all of my profits,” said Mrs. Schmidt, also part owner of Studio Vertu, maker of fresco-style tiles and coasters.

        Deciding what to buy for the holiday shopping season began in June. That's when Mrs. Schmidt explored home fashion magazines for hot trends and products, preparing for the trade shows. She honed a shopping list of items that would be suitable for the Nest, creating a European-style that sparks romantic images of free afternoons and glamorous dinner parties. But there were few free afternoons for Mrs. Schmidt, who had to decide how many tasting spoons, Parisian towels and leather baby booties to buy.

        Ordering inventory is the small retailer's single biggest holiday issue, said George Whalin, author of the upcoming book Retail Success.

        “Nobody has an absolute handle on it,” said Mr. Whalin, of San Marcos, Calif. “It's absolutely part art, part science.”

        Mrs. Schmidt built her holiday forecast on several variables. She looked at her budget. She reviewed her receipts. She talked to merchants, some of whom said fourth quarter sales equaled that of the entire rest of the year.

        “I was a little more conservative,” said Mrs. Schmidt, who has yet to earn a paycheck. “I almost doubled my sales each quarter. I'm anticipating to more than double my sales from the third to fourth quarter.”

        If Nest performs as expected, it would completely sell out through the holidays. If the store clears out too soon, Mrs. Schmidt lined up six reliable vendors that could quickly deliver products in a pinch. Her time at Studio Vertu taught her some tricks about spotting good vendors. She also can fall back on Studio Vertu for goods.

        This plan also works for filling shelves in January.

        “What's important is to execute inventories to set the table for the following year,” said Drew White, a merchandising analyst with Retail Merchandising Service Automation, a Riverside, Calif., firm that helps retailers manage inventory.

        And if Christmas is not a sell-out? There could be a killer sale, but Mrs. Schmidt did not order a lot of holiday-sensitive items.

        She says she'd be lying if she said she wasn't scared.

        “Retailing is the unknown. It's just hard to judge.”

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