The Significance of Holiday Spending for Small Businesses
The holiday season is a crucial time for small businesses, as it accounts for more than 25% of their annual revenue. With American consumers projected to spend between $957.3 billion and $966.6 billion between November 1 and December 31, retailers can expect a significant increase in sales and revenue.
Record-breaking Holiday Spending Forecast
Retailers are Set to Benefit
E-commerce sales are expected to increase by 7% to 9% from last year, reaching between $273.7 billion and $278.8 billion. Despite a slightly lower growth rate compared to the previous year, this surge in spending is attributed to the strong stimulus spending of 2022.
Consumer Spending Drives Economic Growth
The NRF’s chief economist, Jack Kleinhenz, emphasizes that consumers are the driving force behind the economy’s growth, especially with a 4% increase in consumer spending responsible for more than half of the total GDP increase in the third quarter.
Impact on Small Businesses
Small Businesses’ Lifeline
The holiday season is crucial for small businesses, as it accounts for more than 25% of their annual revenue, with retailers being twice as likely to generate at least 50% of their revenue during this period. However, only one-third of consumers realize the significance of their holiday spending on small businesses.
Support from Communities
54% of small business owners receive the most support from their communities during the holiday season. Supporting small businesses is the top reason consumers decide to visit or buy from them, creating a mutually beneficial relationship.
Attracting and Retaining Customers
Small Businesses’ Goals
Attracting new customers and retaining current ones are the top priorities for small businesses during the holidays. 84% of consumers are likely to visit a small business they’ve never purchased from, and 87% are more likely to return to a small business in the future after visiting or buying from them during the holidays.
Small businesses should focus on personalized emails and texts, social media ads, and sales or discounts to attract and retain customers during the holidays. Unfortunately, the report also shows that most small businesses lack an effective marketing strategy to nurture, retain, and convert their holiday customers in the new year.
Holiday Hiring and Positive Outlook
Positive Impact on Employment
The surge in consumer spending also leads to positive news for American workers, with retailers expected to hire between 345,000 and 450,000 seasonal workers for the holiday sales season.
In conclusion, the holiday season presents a significant opportunity for retailers, both online and in-store, to capitalize on increased consumer spending. Small businesses, in particular, rely heavily on holiday sales to sustain their operations, making it essential for consumers to realize the impact of their spending on these businesses. By understanding the significance of holiday spending, consumers can contribute to the success of small businesses and local economies.