Small businesses brace for cautious holiday shoppers

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NEW YORK (AP) — Small businesses are filling shelves at the start of this holiday season and waiting to see how many gifts inflation-weary shoppers crave.

Holiday shopping has been relatively strong over the past two years, with shoppers flocking online to spend, helped by pandemic stimulus dollars. According to the National Retail Federation, sales in November and December averaged around 20% of annual retail sales, making the holiday season crucial for many retailers.

This year, small businesses are bracing for a calmer season as some Americans spend more cautiously. AlixPartners, the global consultancy, expects holiday sales to grow between 4% and 7%, well below last year’s 16% growth. With inflation above 8%, retailers would see a drop in real sales.

To prepare, owners say they’re ordering inventory earlier to avoid supply chain issues that have frustrated them over the past two holiday seasons and to attract early risers. They increase discounts as much as they can in the face of their own higher costs. And owners also hope more people will shop in stores and holiday markets after doing more of their shopping online during the pandemic.

Max Rhodes, CEO of Faire, an online marketplace used by small businesses to wholesale their merchandise as well as buy merchandise for retail stores, said he’s seen previous orders from merchants who, for two years were struggling to get enough holiday stock in time for Christmas. . Stores faced shortages of everything from holiday decor to gift items as COVID-19 shutdowns forced factories to shutter, costs rose and fewer shipping containers and truckers were available , which caused delivery grunts.

A study for the Council of Supply Chain Management Professionals by global consulting firm Kearney found that US business logistics costs jumped 22.4% in 2021 to $1.85 trillion.

“There’s a bit of a hangover about it, a bit of fear,” Rhodes said. Although it’s too early for sales data, “Christmas” was the most searched term on the site in mid-September. That’s two weeks earlier than last year and eight weeks earlier than 2020, Rhodes said.

“The one thing we know for sure is that it won’t be predictable… We really don’t know what to expect and our retailers feel the same way,” Rhodes said.

Mat Pond operates The Epicurean Trader in San Francisco, which includes four physical stores, an online store, and a corporate gift basket business. For the past few years, it’s started building inventory in November, but this year it’s already stocking up on items like gourmet foods, chocolate, wine, and gift items. It also sees businesses ordering holiday gift baskets earlier.

“Everyone is planning ahead,” Pond said. “I think everyone is learning from the last two years.”

While the economic impact of the pandemic has eased somewhat, consumers are now facing high inflation and rising interest rates. Overall spending held up, although some Americans were forced to retreat from discretionary spending. Any drop can be significant because consumer spending accounts for 70% of economic activity.

Hannah Nash, owner of online jeweler Lucy Nash, expects sales of her earrings, bracelets and other jewelry to slow after two years of strong growth. The main culprit: inflation.

“There’s less money for the average person, and we expect their living expenses to impact how much they can spend on holiday shopping,” Nash said.

Nash also expects more people to shop at stores this holiday. She started her Indianapolis-based business during the pandemic when online shopping boomed. The percentage of total retail sales made online rose from 11.5% in 2019 to 17.7% in 2020, then rose again to 18.8% last year, according to Mastercard SpendingPulse, which tracks all payment types, including cash and debit card.

Nash is stepping up discounts and offering bundles to entice buyers: Its plans include a 15% discount for new customers this year, up from 10% from November. And it will offer product bundles that are about 20% cheaper than buying items separately.

Major retailers such as Amazon and Walmart also offered holiday deals to cash-strapped Americans earlier this year. Amazon held a two-day discount event on October 11-12 where the average order was $46.68, which was $13 less than shoppers spent during the Amazon’s Prime Day sale event. company in July, according to data group Numerator.

Some business owners are hoping to take advantage of any changes in shopping at holiday markets and in stores.

Kimberly Behzadi operates Read It & Eat Box in Buffalo, NY, which sells themed boxes with food and a book in each box. She started the business in 2020, during the pandemic. She has an online store but hopes the return to full capacity of holiday markets will boost sales. She depends a lot on holidays — 40% of her annual income is between October and December.

It plans to be in six markets this year, with two more applications pending.

“Last year, holiday markets were still constrained by the necessary safety protocols for Covid-19,” she said. “This year fortunately we are able to attend and sell to more local holiday markets, so I expect to double my holiday income this year.”

Behzadi also plans to be more promotional.

“With high inflation rates this year, I expect consumers to be looking for deals, so I’ve adapted my vacation strategy to include more packages and deals,” she said. . She offers a $60 box that comes with a $25 blind date book for Black Friday, for example.

Mariana Leung-Weinstein sells alcohol-infused jam and marshmallows and other farm-inspired gifts at approximately 25 stores through her Wicked Finch Farm brand in Pawling, NY, which she launched in 2019. She focuses on stockpiling in stores in case online sales slow.

“I expect people to enjoy seeing and touching things in person this time around, which allows me to focus more on getting my products to physical stores in time for the holidays,” said she declared.

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