Small Companies Prepare For Wary Holiday Shoppers

This holiday season, small companies are filling shelves early and waiting to see how many items inflation-weary consumers feel like giving. On Friday, October 14, 2022, in Noblesville, Indiana, Hannah Nash places jewelry in a package that will be mailed out. Nash runs a small business out of her residence.

Holiday Shopping

The last two years saw robust holiday shopping as consumers raced to internet retailers to spend, helped by epidemic stimulus funds. According to the National Retail Federation, sales in November and December often account for 20% of total retail sales, making the Christmas season crucial for many companies.

Small companies are preparing for a slower holiday this year as some Americans are more frugal with their spending. The international consulting firm AlixPartners predicts that holiday sales will increase by 4% to 7%, a significant decline from the 16% growth seen in 2017. Actual sales for shops would drop if inflation rose above 8%.

To attract early birds and prevent the supply-chain hiccups that irritated them the last two holiday seasons, proprietors said they are acquiring merchandise earlier as a precaution. In response to their own more significant costs, they increase discounts as much as possible. Additionally, business owners expect that after spending more of their purchasing online during the pandemic, customers will visit more shops and Christmas fairs.

According to Max Rhodes, CEO of Faire, a website where small businesses can sell their products wholesale and purchase products for retail stores, he is already receiving earlier orders from retailers that, for the past two years, have struggled to stock up on enough festive merchandise in time for Christmas. As a result of COVID-19 lockdowns forcing industries to close, rising prices, and a shortage of shipping containers and truckers, stores experienced shortages of everything from holiday d├ęcor to gift products, which caused delivery delays.

 

Global consulting firm Kearney conducted a study for the Council of Supply Chain Management Professionals and discovered that logistics expenditures for American businesses increased by 22.4% to $1.85 trillion in 2021.

Rhodes remarked, “There’s a little bit of a hangover from that, a little bit of anxiety.” Although it’s too soon to get sales data, in mid-September, “Christmas” was the most frequently searched term on the website. According to Rhodes, that is eight weeks earlier than in 2020 and two weeks earlier than the previous year.

According to Rhodes, the only thing that can be predicted is that it won’t be. “We truly don’t know what to expect, and our retailers feel the same way,” he added.

The Epicurean Trader is a chain of four physical stores, an internet store, and a corporate gift basket company run by Mat Pond in San Francisco. He used to start building his inventory in November, but he has already started buying things like wine, chocolate, and giftware this year. Businesses are ordering holiday gift baskets early, he observes.

Everyone is making plans in advance, Pond said. Everyone, in my opinion, has learned from the previous two years.

Although the economic effects of the epidemic have partially subsided, consumers are now facing a double whammy of high inflation and rising interest rates. Although some Americans have been compelled to cut back on discretionary purchases, overall expenditure has maintained steady. Since 70% of economic activity comprises consumer spending, any decline can have an impact.

After two years of rapid development, Hannah Nash, the online jeweler Lucy Nash’s proprietor, anticipates a slowdown in the sales of her earrings, bracelets, and other jewels. The primary offender is inflation.

The average individual had less money available to them. Thus Nash predicted that their living expenditures would affect how much they could spend on holiday shopping.

Additionally, Nash anticipates a rise in shoppers during these holidays. She established her Indianapolis-based company at the height of the pandemic when online sales were booming. According to Mastercard SpendingPulse, which tracks all types of payments, including those made with cash and debit cards, the percentage of retail sales online increased from 11.5% in 2019 to 17.7% in 2020, then increased once more to 18.8% last year.

Nash is increasing discounts and providing packages to entice clients: Her plans call for a 15% discount this year, up from 10%, beginning in November, for new customers. Additionally, she will provide product packages that are around 20% less expensive than purchasing individual things.

Major merchants like Amazon and Walmart have already started extending holiday bargains to Americans who are short on cash. The average order during Amazon’s two-day sale on October 11 and 12 was $46.68, which is $13 less than what customers paid during the company’s Prime Day sales event in July, according to the statistics firm Numerator.

Some company owners want to profit from the shift in consumers’ buying habits toward holiday markets and retail establishments.

In Buffalo, New York, Kimberly Behzadi is the owner of Read It & Eat Box, a company that sells themed boxes filled with food and books. Amid the epidemic in 2020, she launched her company. Although she has an internet store, she anticipates a sales increase when the holiday markets resume operating at total capacity. She is heavily reliant on the holiday season since, between October and December, she makes 40% of her yearly income.

She has six markets for this year and two more applications waiting.

She claimed that the requisite safety precautions for Covid-19 still placed restrictions on the holiday markets the previous year. I hope to quadruple my Christmas revenue this year because we can attend and sell at more local holiday markets.

Big Deals this year

Behzadi also intends to promote herself more. Because of this year’s high inflation rates, she has modified her holiday marketing plan to incorporate more bundles and discounts. For Black Friday, she’s promoting a $60 box with a $25 blind-date book, for instance.

Through her Wicked Finch Farm business, Mariana Leung-Weinstein of Pawling, New York, sells alcohol-infused jam, marshmallows, and other farm-themed gifts at around 25 different retailers she began in 2019. If internet sales slacken, she concentrates on stocking up in stores.

This time around, she said, “I anticipate that consumers will enjoy seeing and touching things in person, which puts more of my focus on getting my products in real stores in time for the holidays.”

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