Why small businesses and retailers are bracing for a frosty 2024 holiday sales season
Retail sales numbers have remained a bright economic spot in recent months, even as hiring has slowed and the unemployment rate has ticked up. The most recent numbers, for August, showed that retail sales were up 2.1% year-over-year. But small businesses around the country are bracing for a potentially difficult holiday season and fourth quarter—a time during which many companies sprint to the finish to reach their annual goals. That’s a key takeaway from the latest Small Business Now report released on Tuesday from Constant Contact, which surveyed more than 1,600 small businesses in the United States, Australia, Canada, and the U.K., along with 3,000 consumers. The report finds that this year, specifically, small businesses and retailers are feeling the pinch as more than half of consumers have reduced their spending at small businesses due to inflation. Accordingly, companies are adjusting their strategies—but they aren’t confident it’s going to work. “With the inflationary issues companies are dealing with through the year, it puts on more pressure—businesses are in catch-up mode,” says Sarah Jordan, chief marketing officer at Constant Contact, as to why the fourth quarter is typically so important for small businesses. This year, Jordan expects the biggest pinch to be felt by retail and service-based small businesses and warns that even as big-picture economic data, like retail sales, appears rosy, it’s a different story on the ground. “Part of the challenge is that a lot of the data put out at the macro level blends companies of all sizes,” she says. “When you zero in on how that impacts small businesses, despite what you might be seeing in the macro economy, small companies are still feeling the pinch.” Lessons from 2023: holidaying is hard Additionally, the report finds that almost 80% of small businesses that measure their marketing effectiveness are “uncertain that their holiday strategy was effective in 2023.” So, some small companies are flying blind, in some respects. But there are some bright spots. Affirm, for example, released a report last week that found that despite economic concerns, 70% of Americans say they “feel the same or more confident about their ability to manage holiday expenses this year compared to last.” Constant Contact’s data also showed that 78% of consumers plan to holiday shop at a small business “they’ve never purchased from before.” Jordan notes that data points such as those should give small businesses a shot of confidence heading into the final stretch of the year. “Despite the tones of apprehension and fear, the trends are positive. The fact that they plan to focus on spending at small businesses is really positive,” she says. “That’s a real focus [for consumers], especially after COVID.”
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Retail sales numbers have remained a bright economic spot in recent months, even as hiring has slowed and the unemployment rate has ticked up. The most recent numbers, for August, showed that retail sales were up 2.1% year-over-year.
But small businesses around the country are bracing for a potentially difficult holiday season and fourth quarter—a time during which many companies sprint to the finish to reach their annual goals.
That’s a key takeaway from the latest Small Business Now report released on Tuesday from Constant Contact, which surveyed more than 1,600 small businesses in the United States, Australia, Canada, and the U.K., along with 3,000 consumers.
The report finds that this year, specifically, small businesses and retailers are feeling the pinch as more than half of consumers have reduced their spending at small businesses due to inflation.
Accordingly, companies are adjusting their strategies—but they aren’t confident it’s going to work.
“With the inflationary issues companies are dealing with through the year, it puts on more pressure—businesses are in catch-up mode,” says Sarah Jordan, chief marketing officer at Constant Contact, as to why the fourth quarter is typically so important for small businesses.
This year, Jordan expects the biggest pinch to be felt by retail and service-based small businesses and warns that even as big-picture economic data, like retail sales, appears rosy, it’s a different story on the ground.
“Part of the challenge is that a lot of the data put out at the macro level blends companies of all sizes,” she says. “When you zero in on how that impacts small businesses, despite what you might be seeing in the macro economy, small companies are still feeling the pinch.”
Lessons from 2023: holidaying is hard
Additionally, the report finds that almost 80% of small businesses that measure their marketing effectiveness are “uncertain that their holiday strategy was effective in 2023.” So, some small companies are flying blind, in some respects.
But there are some bright spots. Affirm, for example, released a report last week that found that despite economic concerns, 70% of Americans say they “feel the same or more confident about their ability to manage holiday expenses this year compared to last.”
Constant Contact’s data also showed that 78% of consumers plan to holiday shop at a small business “they’ve never purchased from before.”
Jordan notes that data points such as those should give small businesses a shot of confidence heading into the final stretch of the year.
“Despite the tones of apprehension and fear, the trends are positive. The fact that they plan to focus on spending at small businesses is really positive,” she says. “That’s a real focus [for consumers], especially after COVID.”
