By Rieva Lesonsky
The holiday shopping season is important to the financial survival of many small businesses.
Good news for the nation’s retailers (online and in-store), the National Retail Federation (NRF) recently released its holiday spending forecast, showing that holiday spending is expected to set new records. Between November 1 and December 31, U.S. consumers will likely spend between $957.3 billion and $966.6 billion, an increase of 3-4% from 2022.
E-commerce sales will increase even more. Online shopping figures (included in the total) are expected to reach between $273.7 billion and $278.8 billion, up from $255.8 billion last year, an increase of 7 to 9 percent.
Although the projected growth rate of these record numbers is lower than last year, the NRF attributes this to 2022 stimulus spending. The current growth trajectory is reminiscent of the pre-COVID-19 years (2010 to 2019) , which saw an average annual increase of 3.6%.
Knowing that a few weeks ago, the American gross domestic product (GDP) posted the fastest growth in almost two years for the third quarter (annualized rate of 4.9%), the NRF forecasts are not shocking. Consumer spending increased 4% for the quarter and was responsible for more than half of the increase in total GDP.
Consumer spending keeps the economy afloat
Consumers have kept the economy afloat, says Jack Kleinhenz, chief economist at the NRF, adding: “Consumers remain in control and are showing resilience. [But they’ll]
look for deals and discounts to stretch their dollars.
Retailers aren’t the only winners. Kleinhenz says: “Growth in spending on services is strong and growing faster than spending on goods. The amount of spending on services is again in line with pre-pandemic trends.
The NRF has also just published its latest vacation surveywhich is separate from holiday sales forecasts, revealing that “consumers plan to spend $875 this year on holiday staples, including gifts, decorations, food and other holiday-related purchases” .
Officially, the holiday season has been defined as beginning on November 1 and ending on December 31. However, the NRF Holiday Survey found that 43% of consumers had already started their holiday shopping in October (or even earlier) and would likely continue through January.
Holiday Spending Helps Small Businesses Survive
The continued increase in consumer spending is a panacea for small business owners. A special holiday edition of Small business now A report from Constant Contact shows how crucial the last three months of the year are to the financial success of small businesses.
According to the study, the holiday season is much more vital for small businesses than most shoppers realize. Constant Contact says: “Holiday sales account for more than 25% of annual revenue for half of the nation’s small businesses” – and retailers (online and in-store) “are twice as likely as other businesses to generate at least 50% of their turnover. income during the holiday period.
Most consumers don’t realize their importance to the financial survival of many small businesses: only a third believe their holiday spending has a significant impact on small businesses.
Some other highlights from the Small Business Now report:
- 54% of small business owners say they receive the most support from their community during the holiday season.
- Supporting small businesses and their community is the number one reason consumers decide to visit or purchase from a small business.
- After a customer visits or purchases from them during the holiday season, small business owners feel grateful (78%), happy (69%) and hopeful (37%).
More articles from AllBusiness.com:
Acquire (and retain) new customers during the 2023 holiday season
Attracting new customers is the main goal of most small businesses during the holiday season, and consumers “are open to being courted,” according to Constant Contact.
- Small business owners’ top goals during the holidays are finding new customers (63%), retaining current customers (52%), and planning for next year (45%).
- 84% of consumers surveyed will likely visit a small business they have never purchased from this holiday season.
- 87% of consumers say they are more likely to return to a small business in the future after visiting/purchasing from them during the holidays.
- The top marketing tactics small businesses use to increase their customer base during the holidays are personalized emails and text messages (52%), social media ads (42%), and sales or discounts (40%).
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.” And small business owners know it: only 18% believe their strategy is “very effective” and 14% say they have no customer loyalty strategy.
But consumers want to be marketed to this time of year.
- 81% say they are more willing to receive emails or texts from a small business after visiting or purchasing from them during the holidays.
- But only 49% receive an email after making a purchase, and 27% say they never hear from the company again.
The good news is that even though the sale season has started, you can still create and send effective holiday emails and text marketing messages.
Small businesses hire temporary workers during the holiday season
And consumer spending leads to positive news for American workers. The NRF expects retailers to “hire between 345,000 and 450,000 seasonal workers” for the 2023 holiday sales period.
About the Author
Rieva Lesonsky is CEO of GrowBiz Media and SmallBusinessCurrents.com and has been covering small business and entrepreneurship for over 30 years. Get more insights on business trends by subscribing to her free Currents newsletter.
RELATED: Holiday Shopping Trends in 2023: Here’s What Customers Want