Written by Riva Lesonsky
The holiday shopping season is critical to the economic survival of many small businesses.
The good news for U.S. retailers (online and brick-and-mortar) is that the National Retail Federation (NRF) recently released its holiday spending forecast, showing that holiday spending is expected to set a new record. From Nov. 1 to Dec. 31, U.S. consumers could spend $957.3 billion to $966.6 billion, an increase of 3% to 4% from 2022.
EC sales will continue to grow. Online shopping volume (included in total) is expected to reach $273.7 billion to $278.8 billion, up 7% to 9% from $255.8 billion last year.
Although the projected growth rate for these record numbers is lower than last year, the NRF attributes this to stimulus spending in 2022. The current growth trajectory dates back to before COVID-19 (2010-2019). The average annual growth rate is 3.6%.
The NRF's forecast is not shocking, given that a few weeks ago the U.S.'s third-quarter gross domestic product (GDP) posted its highest growth rate in nearly two years (4.9% annualized). Personal consumption increased by 4% in the quarter, accounting for more than half of the overall increase in GDP.
Consumer spending supports the economy
NRF Chief Economist Jack Kleinhenz said consumers have supported the economy, adding: [But they’ll]
Looking for deals and discounts to get the most out of your money. ”
Retailers aren't the only winners here. Kleinhenz said: “Growth in services spending is strong and growing faster than goods spending. Spending on services is back to pre-pandemic trends.”
NRF also released its latest holiday research, separate from its holiday sales forecast, which found that “consumers plan to spend $875 on key holiday items this year, including gifts, decorations, food, and other holiday-related purchases.” It was revealed that.
Officially, the holiday season is defined as starting on November 1st and ending on December 31st. However, the NRF Holiday Survey reports that 43% of consumers have already started their holiday shopping in October (or before) and are likely to continue into January.
Holiday spending helps small businesses survive
The surge in consumer spending is a panacea for small business owners. A special holiday edition of Constant Contact's Small Business Now report shows how critical the last three months are to financial success for small businesses.
According to the survey, the holiday season is far more important to small businesses than most shoppers realize. Constant Contact reports that “holiday sales account for 25% or more of annual revenue for half of America's small businesses,” and that retailers (online and brick-and-mortar) have “the potential to generate 50% or more of annual revenue.” is twice as high as any other company.” Income during vacation period. ”
Most consumers do not understand their importance to the economic survival of many small businesses. Only a third think holiday spending has a big impact on small businesses.
Other highlights from the Small Business Now report include:
- 54% of small business owners say they receive the most support from their community during the holiday season.
- Supporting small businesses and their communities is the number one reason consumers visit and buy from small businesses.
- Small business owners feel grateful (78%), happy (69%), and hopeful (37%) after a customer visits or makes a purchase during the holiday season.
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Acquire (and retain) new customers during the 2023 holiday season
According to Constant Contact, acquiring new customers is a top goal for most small businesses during the holiday season, and consumers are “more than willing to be courted.”
- Small business owners' top goals for the holiday season are finding new customers (63%), retaining existing customers (52%) and planning for next year (45%).
- 84% of consumers surveyed are likely to visit a small business they have never shopped from this holiday season.
- 87% of consumers say they are more likely to return to a small business in the future after visiting or purchasing from one while on vacation.
- The main 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 do not have an effective marketing strategy to develop, retain, and convert holiday customers in the new year.” And small business owners know it too. Only 18% believe their company's strategy is “very effective,” and 14% say they don't have a customer retention strategy.
But consumers want marketing during this time.
- 81% say they would be more willing to receive emails or text messages from small businesses after visiting or shopping with them during the holidays.
- However, only 49% received an email after making a purchase, and 27% said they never heard from the company again.
The good news is that you can still create and send effective holiday emails and text marketing messages even after the holiday sales season begins.
Small businesses hire temporary employees this holiday season
And consumer spending leads to good news for American workers. NRF expects retailers to “hire between 345,000 and 450,000 seasonal workers” for the 2023 holiday season.
About the author
Rieva Lesonsky is CEO of GrowBiz Media. SmallBusinessCurrents.com I've been covering small business and entrepreneurship for more than 30 years.Sign up with her to get more insight into her business trends free ocean current Newsletter.
Related: Holiday shopping trends for 2023: This is what customers are looking for
