NEW YORK (AP) – Small businesses are stocking shelves early this holiday season and waiting to see how many gifts inflation-weary consumers will give.
Holiday shopping has been relatively strong over the past two years as shoppers flock to pay online, helped by pandemic stimulus dollars. According to the National Retail Federation, sales in November and December averaged 20 percent of annual retail sales, making the holiday season critical for many retailers.
This year, small businesses are bracing for a quieter season as some Americans are more cautious. Alix Partners, an international consulting firm, predicts holiday sales will increase 4% to 7%, down from last year’s 16% growth. As inflation runs above 8%, retailers will see a decline in real sales.
To prepare, owners say they are ordering items early to avoid supply chain disruptions that have plagued them the past two holiday seasons and to draw early birds. They are maximizing discounts as much as they can given their own high costs. And the owners hope more people will shop in stores and at holiday markets after more people shop online during the pandemic.
Max Rhodes, chief executive of Faire, which allows small businesses to wholesale their goods as well as buy to retail stores, said he’s seen early ordering from merchants who had trouble getting enough holiday stock in the run-up to Christmas two years ago. . Shops are experiencing shortages of everything from holiday decorations to gift items as the Covid-19 lockdowns have forced factories to close, rising costs and fewer shipping containers and trucks.
According to a study by the Kearney Council of Supply Chain Management Professionals, a global consulting firm, US business logistics spending will rise 22.4% to $1.85 trillion by 2021.
“Then there’s a little bit of a hangover, a little bit of fear,” Rhodes said. While it’s too early for sales data, “Christmas” was the most searched word 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’re sure of is that it’s unpredictable … we really don’t know what to expect, and our retailers feel the same way,” Rhodes said.
Matt Curre operates Epicurean Merchants in San Francisco, including four brick-and-mortar stores, an online store and a corporate gift basket business. In past years, he’s started building inventory in November, but this year he’s stocking items like gourmet food, chocolate, wine and gift items. He’s seeing corporations pre-order holiday gift baskets.
“Everybody is planning ahead,” said Pond. I think everyone is learning from the last two years.
While the economic impact of the pandemic has subsided somewhat, consumers are now dealing with high inflation and rising interest rates. Overall, spending has lagged, although some Americans have been forced to pull back on in-demand items. Any decline could be meaningful because consumer spending accounts for 70% of economic activity.
Hannah Nash, owner of Lucy Nash online jewelry, expects sales of her earrings, bracelets and other jewelry to slow after two years of strong growth. The main culprit: inflation.
“The average person has less money to spend and we expect their cost of living to have an impact on how much they can spend on holiday shopping,” Nash said.
Nash also expects more people to shop in stores this holiday season. During the pandemic, when online shopping was booming, she started her Indianapolis-based business. The percentage of total retail sales made online rose from 11.5% in 2019 to 17.7% in 2020, then rose again to 18.8% last year, according to MasterCard’s SpendingPulse, which tracks all types of payments, including cash and debit cards.
Nash is ramping up discounts and offering bundles to attract shoppers: Its plans include a 15% discount for new customers starting in November, up from 10% this year. And she offers bundles of products that are about 20% cheaper than buying items individually.
Major retailers like Amazon and Walmart are also offering holiday deals to cash-strapped Americans earlier this year. Amazon held a two-day discount event Oct. 11-12, and the average order was $46.68, less than the $13 shoppers spent during the company’s Prime Day sales event in July, according to the data group’s numbers.
Some business owners hope to use any shift to shop at holiday markets and stores.
Kimberly Behzadi runs Read It & Eat Box in Buffalo, NY, selling boxes with food and a book in each box. She started the business in 2020 when the pandemic hit. She has an online store but is hoping the return of the holiday markets to full capacity will boost sales. She is heavily dependent on the holidays – 40% of her annual income comes between October and December.
It plans to be in 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, thankfully, we’ve been able to sell at local holiday markets, so I expect to double my holiday income this year.”
Behzadi plans to be more promotional.
“With high inflation this year, I expect consumers will be looking for deals, so I’ve adjusted my holiday strategy to include more bundles and deals,” she says. For example, for Black Friday, she offers a $60 box worth $25.
Mariana Ling-Weinstein sells alcohol-infused jams and marshmallows and other farm-themed gifts in 25 stores at the Wick Finch Farms brand in Pawling, NY, which she launched in 2019. If online sales slow, it is focusing on stocking in stores.
“I expect people will enjoy seeing and touching things in person this time around, which will give me more focus to get my products into physical stores in time for the holidays,” she says.
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