We’re once again heading into the holidays in 2017, and despite a raft of natural disasters that might have otherwise dampened our collective holiday spending spirit, the country is gearing up to spend more than it ever has on gifts.
The holidays are always prime time for retailers, but early signs are pointing to small business owners in particular needing to be ready for the biggest season yet.
Holiday Spending Over the Years
We spend money all year round, but the holiday season months of November and December are the high point of the year for retail businesses.
Holiday spending has been steadily on the rise since 2008, when holiday gift-giving took a massive hit due to the downturn in the economy. Spending rose just .02 percent in 2009, but rose by over 5 percent the following year.
Since then, holiday spending has risen to unprecedented levels: In 2016, we spent over $655 billion collectively. And this year, the National Retail Federation predicts another increase in spending by as much as 4 percent, which would mean more than $680 billion in sales.
Part of the reason that this year’s season has such a robust prediction is the amount of time between Thanksgiving and Christmas: A full 32 days will pass between the two holidays, which means people will have even more time than usual to buy things they think their loved ones might want or need.
In all, consumers predict that they’ll spend nearly $1,000 apiece this season. The only question is, how will they spend that money, and where?
Why Small Business Owners Need To Be Ready
Depending on who you ask, consumers will either flood small businesses, or, well, not so much. The NRF Holiday Spending Survey says 25 percent of respondents plan to shop at local/small businesses. But e-commerce powerhouse Vistaprint says ¾ of U.S. consumers plan to do “at least some” of their holiday shopping with small businesses.
Small business owners are accustomed to the unknown, of course, so this disparity in predictions should come as no surprise.
It’s possible that small businesses will see a larger percentage of their sales come from online channels—assuming they have those. Deloitte says that for the first time this year, online shopping dollars will overtake in-store shopping during the holidays.
Related Article: An Employee For All Seasons: Seasonal Help For Your Small Business
So while consumers may not flock to small business brick-and-mortar locations to do their shopping, they may explore what those businesses can offer them online, particularly if the businesses are competitive on price and shipping options.
But it’s clear that the in-store small business shopping experience appeals to consumers. Shoppers are recognizing the value that buying local and small can bring, and some understand that they’ll have to pay a premium for important things like good in-store customer service (the Vistaprint survey says almost 70 percent of respondents want to shop at a store more often if the owner knows their name).
Holiday Shopping Pitfalls To Avoid
So you’ll want to be prepared for shoppers to potentially bestow at least some of their $1,000 budget on your small business. That doesn’t mean you should just load up on inventory and hope for the best.
One of the best cautionary tales for retailers looking to capitalize on flashy trends actually comes from earlier this year. In 2017, fidget spinners exploded on to the market—everyone had one, especially kids and celebrities looking to market to those kids.
Just half a year later, fidget spinners are “over” and you can see them in bargain bins of dollar stores and supermarkets everywhere. Companies that bet big on the continued meteoric success of spinning toys are now offloading them for a fraction of what they went for in May.
If you’re a small business owner who senses or sees a hot item about to blow up in November and December, it may be tempting to stock up on it and hope to sell a bunch.
But this can hurt you in two major ways: One, if you stock up on the item and it doesn’t sell as well as you predict, you’ll be burning through money to cover the carrying costs of inventory (which includes shelf space, insurance, security, and more), and will have to sell your product at a discount and/or loss just to be done with it.
And two, if you don’t sync up your inventory with some sort of inventory management system, you may find yourself overextended if you try to sell your stock through multiple channels—such as in-store, online, and through a third-party marketplace such as Amazon or Etsy. Nothing is worse for your bottom line and reputation than “selling” an item you don’t actually have in stock.
Point being, especially when there are thousands of dollars in sales on the line, invest in an inventory management software that helps you “pull” inventory, rather than push it, and keep your inventory just ahead of demand rather than way ahead (or even a little behind).
Take Your Momentum Into 2018
Vistaprint’s survey also has good news for small businesses going forward: nearly 27 percent of shoppers say they plan to visit small businesses more in 2018 than in 2017.
So if you’re betting big on this holiday season by making investments in marketing, assets, or inventory tracking (and according to the Wasp Barcode State of Small Business Report, nearly half of small businesses don’t use automated inventory software at this point), know that your purchases could mean big things not just for the next few months, but the next year—and hopefully beyond—as well.
Because of the mercurial nature of the economy and how razor-thin the margins can be for small businesses, it likely comes as a relief to many that the national economy is booming and holiday spending is expected to be huge. But these predictions (which are hardly guarantees) won’t mean much unless your company is poised to take advantage of consumer spending, so make sure you’re ready for a big season, and to capture new customers who will visit your store (or website, or channel on a third-party site) this month, next month, and next year.
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