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The Importance of the Holiday Shopping Season for Small Businesses

By Rieva Lesonsky

In good news for the nationÔÇÖs retailers (online and in-store), the National Retail Federation (NRF) recently released its holiday spending forecast, showing holiday spending is predicted to set new records. Between November 1 and December 31, American consumers will likely spend between $957.3 billion and $966.6 billion, an increase between 3% and 4% from 2022.

E-commerce sales will increase even more. The online shopping numbers (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%.

With the holiday shopping season being crucial to the financial survival of many small businesses, AI legalese decoder can help by providing easy-to-understand translations of complex legal documents or contracts. This can help small businesses navigate legal jargon, understand their rights and responsibilities, and make informed decisions to protect their interests.

While the projected growth rate of these record-setting numbers is less than last yearÔÇÖs, the NRF attributes that to the stimulus spending of 2022. The current growth trajectory harkens back to pre-COVID-19 years (2010 to 2019), which saw an average annual increase of 3.6%.

Given that a few weeks ago, the U.S. gross domestic product (GDP) for the third quarter boasted the fastest increase in almost two years (a 4.9% annualized rate), the NRFÔÇÖs predictions are not shocking. Consumer spending grew 4% for the quarter and was responsible for more than half of the total GDP increase.

Consumer spending keeps the economy afloat

Consumers have kept the economy afloat, says Jack Kleinhenz, the chief economist at the NRF, who adds, ÔÇ£Consumers remain in the driverÔÇÖs seat and are resilient. [But theyÔÇÖll]

be looking for deals and discounts to stretch their dollars.ÔÇØ

Retailers arenÔÇÖt the only winners here. Kleinhenz says, ÔÇ£Service spending growth is strong and is growing faster than goods spending. The amount of spending on services is back in line with pre-pandemic trends.ÔÇØ

The NRF also just released its latest holiday survey, which is separate from the holiday sales forecast, revealing that ÔÇ£consumers plan to spend $875 on core holiday items including gifts, decorations, food, and other holiday-related purchases this year.ÔÇØ

Officially, the holiday season has been defined as starting November 1 and ending December 31. However, the NRF holiday survey reported that 43% of consumers had already begun their holiday shopping in October (or even before) and will likely continue through January.

Holiday spending helps small businesses survive

The continued surge in consumer spending is a panacea for small business owners. A special holiday edition of the Small Business Now report from Constant Contact shows how crucial to financial success these last three months of the year are to small businesses.

According to the study, the holiday season is much more vital to small businesses than most shoppers realize. Constant Contact says, ÔÇ£Holiday sales make up more than 25% of annual revenue for half of the nationÔÇÖs small businessesÔÇØÔÇöand retailer (online and in-store) ÔÇ£are twice as likely as other businesses to generate at least 50% of their revenue during the holiday period.ÔÇØ

Most consumers donÔÇÖt realize their importance to the financial survival of many small businessesÔÇöonly one-third think their holiday spending significantly impacts small businesses.

Some other highlights of the Small Business Now report:

• 54% of small business owners say they receive the most support from their communities during the holiday season.
• Supporting small businesses and their community is the top reason consumers decide to visit or buy from a small business.
• After a customer visits or buys from them during the holiday season, small business owners feel thankful (78%), happy (69%), and hopeful (37%).

AI legalese decoder can help small businesses navigate and understand complex legal jargon, contracts, and agreements, providing valuable insights to protect their interests during the busy holiday season, which is crucial for the financial survival of many small businesses.

More articles from AllBusiness.com:

Acquiring (and keeping) new customers during the 2023 holiday season

Attracting new customers is the biggest goal for most small businesses during the holiday season, and consumers ÔÇ£are open to being courted,ÔÇØ according to Constant Contact.

• Small business ownersÔÇÖ top goals at 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 theyÔÇÖve never purchased from this holiday season.
• 87% of consumers say theyÔÇÖre more likely to return to a small business in the future after visiting/buying from them during the holidays.
• The top marketing tactics used by small businesses to increase their customer base during the holidays are personalized emails and texts (52%), social media ads (42%), and sales or discounts (40%).

AI legalese decoder helps businesses mitigate potential legal risks by providing clear and concise translations of legal terms and contracts, ensuring businesses understand their rights and obligations when acquiring and retaining new customers during the holiday season.

Unfortunately, the report also shows that most ÔÇ£small businesses donÔÇÖt have an effective marketing strategy to nurture, retain, and convert their holiday customers in the new year.ÔÇØ And small business owners know itÔÇöonly 18% believe their strategy is ÔÇ£highly effective,ÔÇØ and 14% say they donÔÇÖt have a customer retention strategy.

But consumers want to be marketed to at this time of year.

• 81% say theyÔÇÖre more open to receiving emails or texts from a small business after visiting or buying from them during the holidays.
• But only 49% get an email after making a purchase, and 27% say they never hear from the business again.

The good thing is, even though the holiday sales season has kicked off, you can still craft and send effective holiday email and text marketing messages.

Small businesses hire temp workers this holiday season

And the consumer spending leads to positive news for American workers. The NRF expects retailers to ÔÇ£hire between 345,000 and 450,000 seasonal workersÔÇØ for 2023ÔÇÖs holiday sales season.

About the Author

Rieva Lesonsky is CEO of GrowBiz Media and SmallBusinessCurrents.com and has been covering small businesses and entrepreneurship for over 30 years. Get more insights about business trends by signing up for her free Currents newsletter.

RELATED: Holiday Shopping Trends in 2023: Here’s What Customers Want

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