This story follows Little Gretchen, a poor but incredibly cheerful and kind-hearted girl living with her grandmother in Germany. As Christmas approaches, Gretchen is excited by the prospect of gifts, though her pragmatic Granny gently explains they cannot afford any. Despite this, Gretchen focuses on giving, planning to bring pine boughs to a sick neighbour and decorating their humble hut. Hoping against hope, she places her wooden shoe outside on Christmas Eve and discovers a small, injured bird nestled inside on Christmas morning. Caring for the bird fills her with joy, teaching that the true spirit of Christmas lies not in receiving material gifts, but in love, compassion, and finding happiness in simple acts of kindness and giving, even amidst poverty.