Small Business Owners Face Mixed Emotions During the Holiday Season

Small Business Owners Face Mixed Emotions During the Holiday Season

As the holiday season approaches, small business owners in the United States find themselves in a unique position of hope and anxiety, and much of their outlook is influenced by their customers’ behavior.

Consumers have shown resilience in their spending habits, as evidenced by the government’s estimate of a 4.9% growth in the economy during the third quarter. However, there is a shadow of doubt in the minds of consumers when it comes to their financial future, as revealed by a recent AP-NORC poll, which indicates widespread concerns about personal finances.

After two years of experiencing a surge in sales due to the COVID-19 pandemic, small business owners are apprehensive that consumers might have exhausted their pandemic savings and could scale back their holiday spending. The specter of inflation and rising interest rates further adds to this unease, making the economic landscape feel uncertain.

Max Rhodes, CEO of Faire, an online wholesale marketplace utilized by many small retailers, acknowledges this collective unease. He notes that the combination of higher inflation and increased interest rates has left consumers and retailers alike feeling jittery, even though economic data suggests a positive outlook.

To combat supply chain disruptions and ensure they have adequate stock, many retailers began searching for holiday items as early as mid-August this year, compared to mid-September in the previous year.

For numerous small retailers, the holiday season represents a substantial portion of their annual sales. While holiday retail sales are predicted to grow between 3% and 4% in 2023, inflation has tempered the growth rate compared to the previous year, where sales saw a notable increase of 5.3%, according to the National Retail Federation.

Despite the underlying economic uncertainties, initial sales trends are promising. Consumers are indulging in “comfort” items, such as high-end candles, plush stuffed animals, and sparkly decorations, in an effort to bring some cheer into their lives.

Rick Haase, owner of Patina gift shops in Minnesota, describes the trend as a “bright future” characterized by a desire for happiness and escapism.

Owners of stores like Measure Twice in Brooklyn, New York, have noticed a surge in demand for higher-priced candles. Kimberley Yurkiewicz, the store owner, notes that customers are now willing to pay more for these items.

However, store owners are still grappling with the challenges posed by the unpredictable nature of the past few years, marked by factors like COVID-19, fluctuating tourism, and recession fears.

Andy Wilkerson, co-owner of Blackhawk Hardware in Charlotte, North Carolina, reports steady sales this year, despite the abnormal spikes in sales experienced in 2021 and 2022 when more people stayed home for the holidays. With entertaining making a comeback, shoppers are focusing on indoor decorations and place settings.

Supply chain-driven shortages during the pandemic have left a lasting impact on some store owners. Heather Haynie, co-owner of Rock Paper Scissors in Charlottesville, Virginia, decided to have her holiday items out on display in early October instead of mid-month. She is concerned that customers may be lured by deals from larger online retailers like Amazon.

While some small business owners are witnessing growth in sales this year, there’s a noticeable shift in spending habits. Sierra Wallis, owner of Sq/Ft gift shop in Decatur, Georgia, has seen an increase in sales, but customers are spending less per transaction. This shift poses new challenges, as small businesses must work harder to maintain their sales levels.

The holiday season is crucial for many small businesses, often accounting for a significant portion of their annual revenue. While the outlook is generally positive, there’s a sense of unpredictability in the air, with small business owners hoping for the best and crossing their fingers for a successful holiday season.

In an ever-changing economic landscape, the holiday season continues to be a mix of hope and apprehension for small business owners across the United States.