Small businesses brace for cautious holiday shoppers

Oct 15, 2022, 7:48 PM | Updated: Oct 16, 2022, 7:55 am
Hannah Nash places jewelry in a box that will be shipped out, Friday, Oct. 14, 2022, in Noblesville...

Hannah Nash places jewelry in a box that will be shipped out, Friday, Oct. 14, 2022, in Noblesville, Ind. Nash has her small business at her home. Small businesses are stocking the shelves early this holiday season and waiting to see how many gifts inflation-weary shoppers feel like giving. (AP Photo/Darron Cummings)

(AP Photo/Darron Cummings)

NEW YORK (AP) — Small businesses are stocking the shelves early this holiday season and waiting to see how many gifts inflation-weary shoppers feel like giving.

Holiday shopping was relatively strong during the past two years as shoppers flocked online to spend, aided by pandemic stimulus dollars. Sales in November and December have been averaging roughly 20% of annual retail sales, according to National Retail Federation, making the holiday season critical for many retailers.

This year, small businesses are bracing for a more muted season, as some Americans spend more cautiously. AlixPartners, the global consulting firm, forecasts that holiday sales will rise between 4% to 7%, far below last year’s growth of 16%. With inflation running above 8%, retailers would see a decrease in real sales.

To prepare, owners say they’re ordering inventory earlier to avoid the supply-chain snags that frustrated them the past two holiday seasons and to draw in early birds. They’re stepping up 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 sell their wares wholesale as well as buy goods for retail shops, said he’s seeing earlier ordering from merchants who for two years had trouble getting enough holiday inventory stocked in time for Christmas. Stores faced shortages of everything from holiday décor to gift items as COVID-19 lockdowns forced factories to shut, costs rose and fewer shipping containers and truckers were available — all causing delivery snarls.

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

“There’s a bit of a hangover from that, a bit of fear,” Rhodes said. While it’s too early for sales data, the term “Christmas” was the most searched for 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’re certain of is it’s not going to 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, including four brick-and-mortar stores, an online shop and a corporate gift basket business. In past years, he started building inventory in November, but this year he’s already stocking up on items such as gourmet food, chocolate, wine and giftware. He’s seeing corporations order holiday gift baskets earlier as well.

“Everyone’s planning ahead,” Pond said. “I think everybody’s learning from the past two years.”

While the pandemic’s economic impact has subsided somewhat, consumers are now being tag-teamed by high inflation and rising interest rates. Overall, spending has held up, although some Americans have been forced to pull back on discretionary items. Any decline can be meaningful because consumer spending makes up 70% of economic activity.

Hannah Nash, the owner of the 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 is less money going around to 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 in stores during these holidays. She started her business, based in Indianapolis, during the pandemic, when online shopping boomed. The percentage of total retail sales done online jumped from 11.5% in 2019 to 17.7% in 2020, then rose again to 18.8% last year, according the Mastercard SpendingPulse, which tracks all kinds of payments, including those by cash and debit card.

Nash is stepping up discounts and offering bundles to attract shoppers: Her plans include a 15% discount for new customers this year, up from 10%, starting in November. And she’ll offer bundles of products that are about 20% cheaper than buying items separately.

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

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

Kimberly Behzadi operates Read It & Eat Box in Buffalo, N.Y., 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 shop but is hoping the return of holiday markets to full capacity will boost sales. She depends a lot on the holidays — 40% of her annual revenue comes between October and December.

She’s planning on being at six markets this year, with two more applications pending.

“Last year, holiday markets were still limited by the necessary safety protocols for Covid-19 ,” she said. “This year, gratefully, we are able to attend and sell at more holiday markets locally, so my expectation is to double my holiday revenue this year.”

Behzadi also plans on being more promotional.

“With inflation rates high this year I expect consumers to be looking for deals, so I have adapted my holiday strategy to include more bundles and deals,” she said. She’s offering a $60 box that’s bundled with a blind-date book worth $25 for Black Friday, for example.

Mariana Leung-Weinstein sells alcohol infused jam and marshmallows and other farm-inspired gifts at about 25 stores via her Wicked Finch Farm brand in Pawling, N.Y. that she started in 2019. She’s focusing on stocking up in stores in case online sales slow.

“I expect people will enjoy seeing and touching things in person this time around, which puts more of my focus in getting my products in physical stores in time for the holidays,” she said.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Shoppers looking for bargains enter an OshKosh children clothing store, Monday, Nov. 21, 2022, in M...
Anne D'Innocenzio and Cora Lewis, Associated Press

Shoppers hunt for deals but inflation makes bargains elusive

Consumers holding out for big deals -- and some much-needed relief from soaring costs on just about everything -- may be disappointed as they head into the busiest shopping season of the year.
8 hours ago
FILE - The Twitter splash page is seen on a digital device, Monday, April 25, 2022, in San Diego.  ...
Associated Press

Musk plans to relaunch Twitter premium service, again

Elon Musk said Friday that Twitter plans to relaunch its premium service that will offer different colored check marks to accounts next week, in a fresh move to revamp the service after a previous attempt backfired. It’s the latest change to the social media platform that the billionaire Tesla CEO bought last month for $44 […]
8 hours ago
Attorneys of Oath Keepers leader Stewart Rhodes, James Lee Bright, left, and Phillip Linder, arrive...
Associated Press

Jury deliberations resume in Oath Keepers 1/6 sedition case

WASHINGTON (AP) — Jurors who will decide whether to convict Oath Keepers founder Stewart Rhodes and four associates of seditious conspiracy resumed deliberations Monday in the high-stakes trial stemming from the U.S. Capitol attack. Rhodes and his co-defendants are accused of a weekslong plot to stop the transfer of power from Republican Donald Trump to […]
1 day ago
A dog who got trapped in his owners' car for some 72 hours peeks through the windscreen while rescu...
Associated Press

Spotlight on illegal buildings as Ischia death toll now at 8

MILAN (AP) — The Italian resort island of Ischia has a long history of natural disasters, but experts say this weekend’s landslide that has killed eight people and left five missing was exacerbated by a combination of climate change and often-illegal excessive development. Search teams digging through meters of mud and debris for a third […]
1 day ago
Forensic assistant Laurentiu Bigu, left, and investigator Ryan Parraz from the Los Angeles County c...
Associated Press

Fentanyl’s scourge plainly visible on streets of Los Angeles

LOS ANGELES (AP) — In an filthy alley behind a Los Angeles donut shop, Ryan Smith convulsed in the grips of a fentanyl high — lurching from moments of slumber to bouts of violent shivering on a warm summer day. When Brandice Josey, another homeless addict, bent down and blew a puff of fentanyl smoke […]
1 day ago
Associated Press

UN: Great Barrier Reef should be on heritage ‘danger’ list

PARIS (AP) — A United Nations-backed mission is recommending that the Great Barrier Reef be added to the list of endangered World Heritage sites, sounding the alarm that without “ambitious, rapid and sustained” climate action the world’s largest coral reef is in peril. The warning came in a report published Monday following a 10-day mission […]
1 day ago

Sponsored Articles

SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
Small businesses brace for cautious holiday shoppers