Anticipating the Festive Season: Mixed Feelings Among Small Business Owners

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The upcoming holiday season projects to be robust for small businesses across the United States, yet there’s a palpable sense of apprehension among the proprietors as they approach the final months of the year.

Their clientele has a significant role to play in both the optimism and concern felt by these entrepreneurs.

Americans sustained robust spending habits through the summer months, as evidenced by a 4.9% GDP growth in the third quarter, reported by the government. However, despite these open wallets, there’s a prevailing sense of financial gloom among consumers. This sentiment was captured in a recent AP-NORC survey that highlighted widespread worries about future financial prospects among U.S. households.

Small business owners, who witnessed a surge in sales spurred by the pandemic, now harbor fears that consumers may have depleted their extra savings from that period and could either reduce their spending this festive period or revert to online shopping, having initially returned to support brick-and-mortar establishments. Adding to their concern is the persistent inflation, elevated interest rates, and the unpredictable nature of weather conditions.

Max Rhodes, the CEO of Faire, which operates as an online wholesale marketplace utilized by numerous small retailers for inventory procurement, acknowledges this uncertainty. “Retailers are facing a climate of hesitation,” he commented. “The interplay of steep inflation and the uptick in interest rates is instilling a sense of trepidation in consumers, which, in turn, transfers to retailers. It’s an unusual economic situation; the figures are encouraging, yet the overall sentiment remains skeptical.”

Rhodes noted an earlier-than-usual spike in searches for “Christmas” items on his platform, indicating a shift to earlier inventory stocking by retailers to mitigate supply chain delays and ensure product availability for the entire season.

For many shopkeepers, the holiday season represents a substantial portion of their yearly revenue. The National Retail Federation forecasts a 3% to 4% rise in holiday sales for 2023. This growth, while positive, will be slower in real terms due to a moderation in inflation rates, compared to the 5.3% increase seen in the previous year.

Initial sales patterns are mirroring those of past holiday seasons, with customers engaging in spending that offers a respite from their fiscal concerns.

Retailers are noting a trend in the sale of “comfort” items such as luxury candles, adult plush toys, particularly the Jellycat brand, glittering objects including disco balls, and products related to Barbie and Taylor Swift.

“We are championing the ‘bright future’ trend,” stated Rick Haase, proprietor of Patina gift shops in Minnesota. “The current trend reflects a desire for joyful escapism and items that bring positivity into people’s lives amid global uncertainties.”

In Brooklyn, New York, Measure Twice reports an upswing in sales of higher-priced candles. Kimberley Yurkiewicz, the store’s owner, remarked on the challenges of analyzing sales amidst ongoing disruptions such as COVID, fluctuating tourism, and looming recession fears. “True, regular, and normal figures are elusive,” she shared. “The complexity of the situation makes it difficult to determine what baseline sales should look like.”

Andy Wilkerson, co-owner of Blackhawk Hardware in North Carolina, experienced a surge in sales during the previous two years, driven by consumers investing in outdoor decorations. With the return of in-person gatherings, there’s a notable increase in customers purchasing indoor decorations and table settings. Wilkerson finds the steady sales performance reassuring, especially given the abnormal boost in recent years.

Heather Haynie of Rock Paper Scissors in Virginia, having witnessed exceptional holiday seasons in 2021 and 2022, is concerned about her customers being enticed by deals from larger online companies like Amazon. The NRF predicts a 7% to 9% growth in online and non-store sales this year.

Sierra Wallis, owner of the Sq/Ft gift shop in Georgia, reflects on the paradox of increased business activity yet lower spending per customer. The holiday season is critical, accounting for two-thirds of annual sales, which drives her strategy to order all holiday inventory early with hopes of selling out by mid-December.

“We are optimistically cautious,” Wallis concluded. “Every year the sales targets seem daunting, yet somehow, we manage to meet them.”

Frequently Asked Questions (FAQs) about Holiday Sales Small Business

More about Holiday Sales Small Business

• National Retail Federation
• AP-NORC financial poll
• Third quarter GDP growth
• Faire wholesale marketplace
• Jellycat plush toys
• Taylor Swift merchandise
• Holiday spending trends
• Inflation data
• Interest rate effects on retail
• Supply chain impact on holidays
• Online shopping trends
• Consumer spending behavior