NEW YORK (AP) — Small businesses stocked shelves early this holiday season and waited to see how many inflation-weary shoppers wanted to give away.
Holiday shopping has been relatively strong over the past two years as shoppers flock to spend online, aided by pandemic stimulus money. Sales in November and December average about 20% of annual retail sales, according to the National Retail Federation, making the holiday season crucial for many retailers.
This year, small businesses are bracing for a quieter season as some Americans spend more cautiously. Global consulting firm AlixPartners forecast holiday sales to grow 4% to 7%, well below last year’s 16% increase. With inflation above 8%, retailers’ real sales will fall.
To prepare, owners say they’ll order inventory ahead of time to avoid supply chain nights that have frustrated them over the past two holidays and attract early birds. Faced with their own higher costs, they are increasing their discounts as much as possible. Owners are also hoping that more people will shop in stores and holiday markets after more people shop online during the pandemic.
Max Rhodes, chief executive of Faire, an online marketplace used by small businesses to sell goods wholesale and buy for retail stores, said he saw previous orders from earlier orders from merchants who had struggled to get enough holidays in time for two years. In stock for emergencies. As the COVID-19 lockdown forced factory closures, rising costs and fewer container and truck drivers available, stores faced shortages of everything from holiday decorations to gifts — all leading to delivery chaos.
A study by global consulting firm Kearney for the Supply Chain Management Professional Council found that U.S. commercial logistics costs will soar 22.4% to $1.85 trillion in 2021.
“A little hangover, a little fear,” Rhodes said. While sales figures are premature, the term “Christmas” was the most searched term on the site in mid-September. That’s two weeks ahead of last year and eight weeks ahead of 2020, Rhodes said.
“One thing we can be sure of is it’s not going to be predictable … we don’t really know what’s going to happen, and our retailers feel the same way,” Rhodes said.
Mat Pond runs The Epicurean Trader in San Francisco, including four brick-and-mortar stores, an online store and a corporate gift basket business. Over the past few years, he’s started building his inventory in November, but this year he’s already stocking up on items like gourmet food, chocolate, wine and gifts. He also saw companies order holiday gift baskets earlier.
“Everyone is planning ahead,” Pound said. “I think everyone is learning from the last two years.”
While the impact of the pandemic on the economy has waned, consumers are now being weighed down by high inflation and rising interest rates. Overall, spending has held steady even as some Americans have been forced to scale back on discretionary items. Any decline is likely to be meaningful, as 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 culprit: inflation.
“The average person has less money, and we expect their cost of living to affect how much they spend on holiday shopping,” Nash said.
Nash also expects more people to shop in stores during these holidays. She started her business in Indianapolis during the pandemic, when online shopping was booming. The percentage of total online retail jumped from 11.5% in 2019 to 17.7% in 2020, before rising again to 18.8% last year, according to Mastercard SpendingPulse, which tracks various payment methods, including cash and debit card payments.
Nash is ramping up discounts and offering bundles to lure shoppers: Her plans include a 15 percent discount for new customers this year, up from 10 percent in November. She will offer bundles that are about 20% cheaper than buying items individually.
Major retailers like Amazon and Walmart were also offering holiday deals to cash-strapped Americans earlier this year. Amazon held a two-day discount on October 2nd. On the 11th and 12th, the average order was $46.68, $13 less than what shoppers spent during the company’s Prime Day sale event in July, according to data group Numerator.
Some business owners want to take advantage of any turn to holiday markets and store shopping.
Kimberly Behzadi operates Read It & Eat Box in Buffalo, N.Y., which sells food-themed boxes, each with a book in it. During the pandemic, she started her business in 2020. She has an online store, but hopes the holiday market’s return to full capacity will boost sales. She relies heavily on vacation – 40% of her annual income comes from October to December.
She plans to enter six markets this year, with two pending applications.
“Last year, the holiday market was still limited by the necessary safety protocols for Covid-19,” she said. “This year, thankfully, we’re able to attend and sell in more local holiday markets, so I’m hoping to double our holiday revenue this year.”
Behzadi also plans more publicity.
“With high inflation this year, I expected consumers to look for deals, so I adjusted my holiday strategy to include more bundles and deals,” she said. For example, she offered a $60 box with a $25 Black Friday blind date book attached.
Mariana Leung-Weinstein sells alcoholic jams and marshmallows and other farm-inspired gifts in about 25 stores through her Wicked Finch Farm brand, which she founded in Pawling, N.Y., in 2019. She’s focused on stocking up in stores in case online sales slow.
“I hope this time around people will enjoy seeing and touching things, and it makes me more focused on getting my products to brick-and-mortar stores before the holidays,” she said.
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