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Positive Outlook for U.S. Small Businesses This Holiday Season

Posted: 06 Dec 2019 07:30 AM PST

All signs point to a good holiday sales season for businesses. According to NRF's Annual October Holiday Consumer Survey, consumers say they will spend an average of $1,047.83 this holiday season, up 4% from last year. Shoppers between the ages of 35 and 44 plan to spend the most at $1,158.63.

This consumer survey follows NRF's annual holiday spending forecast, which projects overall spending, and estimates holiday retail sales will rise between 3.8%-4.2% for a total of between $727.9 billion and $730.7 billion.

eMarketer predicts holiday retail sales will climb 3.8% to $1.008 trillion this year: the first-ever trillion-dollar holiday season. And Cyber Monday is expected to be the biggest online shopping day in U.S. history, with a total that could approach—or surpass—$10 billion.

According the #ThanksChristmas2019 Study from PR firm Bospar, 52.1% of Americans say they'll spend the same amount of money on holiday shopping compared to last year, 24.8% will spend less, and 23.1% will spend more. Half of those surveyed say concerns about an economic slowdown would affect their holiday shopping, with 25.4% saying these concerns would very much impact their shopping and 24.5% saying these worries would not have an impact.

What are consumers planning to buy?

The NRF's survey says consumers plan to buy gifts for family, friends, and co-workers (average spend $658.55); non-gift holiday items such as candy and food, decorations, greeting cards, and flowers ($227.26 average spend); and other non-gift purchases that take advantage of holiday deals and promotions (average spend $162.02).

The most popular items? NRF's data shows:

  • Gift cards—59%
  • Clothing & accessories—52%
  • Books/movies/music/video games—35%
  • Electronics—29%
  • Home décor—24%
  • Jewelry—23%
  • Personal care/beauty items—21%
  • Sporting goods—18%
  • Home improvement items—17%

Who's buying?

The NRF reports 52% of shoppers between ages 25-34 plan to purchase gifts for co-workers, and 82% of those between 18-24 plan to purchase gifts for their friends.

The 2019 Holiday Purchase Intentions Survey from The NPD Group shows each generation has its own shopping plan. If you want to target the "spenders,” the survey says Gen X and baby boomers will be spending more than other generations on holiday shopping.

Marshal Cohen, chief industry advisor of The NPD Group, breaks down generational shopping for the season:

  • Gen Z will be spending less than all other generations. They're less likely than millennials and Gen X to shop online, but they will likely buy clothing, accessories, and electronics.
  • Millennials are all about the deals, dollars, and technology this holiday.Consumers in this generation plan to spend less than their older counterparts Gen X and boomers, one-third plan to spend more than they did in 2018. Most will shop online.
  • Gen X shoppers plan to spend more than all other generations. They are the most likely generation to buy clothing/accessories (68%) and entertainment items (44%), and most likely to shop mass merchants (51%) and online pure-plays (77%).
  • Boomers plan to spend the second highest amount of all generations, and 26% plan to buy liquor or wine as holiday gifts.
  • Silent Generation shoppers will be shopping in stores and at the last minute. Only half plan to shop online.

Where are consumers shopping?

Holiday shoppers plan to spread their shopping across multiple channels and types of stores, says the NRF—56% plan to shop online, with 92% of those planning to opt for free shipping options and 48% buying online and picking up in store. And 53% will be shopping in stores; 23% plan to shop at local small businesses.

Brick-and-mortar sales remain dominant, says eMarketer. In-store sales for the 2019 holiday season will increase 2.5% to $872.25 billion, totaling 86.6% of holiday sales.

They say e-commerce sales will jump 13.2% to $135.35 billion, representing 13.4% of all holiday retail sales this year. Only 6.4% of total holiday sales will be from m-commerce sales. But m-commerce is the fastest-growing shopping channel—eMarketer estimates it will grow 25.1%, equaling 47.5% of holiday e-commerce sales this year.

Shopping motivators

Sales and discounts are a powerful driver of sales, says the NRF, with 70% of consumers saying it is the main reason they choose to shop at a particular retailer. Other important factors include quality of merchandise (59%), merchandise selection (57%), free shipping and shipping promotions (46%), and convenient location (44%).

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Holiday marketing

According to information from Sprout Social, retailers will see a big increase in social media messages over the holidays. This is especially true for small businesses, which saw a 62% increase in average social messages received over the holidays compared to the rest of 2018.

And you need to be proactive in order to compete. Small businesses, Sprout says, should "look beyond publishing just deals and gift idea listicles and engage their audience by providing timely customer support on social. Interacting with customers, such as answering questions or resolving issues with a product or service, can help small businesses cultivate loyalty and encourage repeat purchasing behaviors."

Once the shopping season is over, Sprout says retailers should use social listening to learn from their holiday experiences and apply those insights towards their 2020 social strategy. With listening, retailers can glean information that can inform product development and even improve the customer experience.

If you sell holiday merchandise, you should be active on Pinterest. Last year the company had 61 million Pinners engaged with holiday content and 54% of Pinners start their holiday shopping before Thanksgiving.

Holiday specific insights from Pinterest’s latest holiday report:

  • Christmas inspiration is up 220% this holiday season.
  • Key themes of holiday inspiration people are searching for in 2019 include personalization (homemade scented candles as gifts: +461%), self-love (self-care package gifts: +134%), sustainability and making memories (experience gifts: +118%).
  • People searching "easy Christmas crafts to sell" is up 12%.

If you want to attract shoppers on Pinterest, it advises small businesses:

  • Upload their catalog to Pinterest.
  • Use Shopping Ads and Shop the Look ads.
  • Incorporate key interests to target, such as "Christmas shopping," "Christmas gift inspiration," or "Holiday gifts."

Shipping concerns

Despite being concerned about global issues, such as tariffs, over 70% of respondents to a DHL Express survey anticipate an increase in e-commerce sales during the 2019 holiday season versus 2018.

The survey also showed "uncertainty about USMCA developments seem to be causing U.S. businesses to look at additional international markets." Businesses expect 30% of their sales to come from Europe this holiday season, 27% from the Asia Pacific, 25% from Mexico/Canada, and 18% from Central and South America. Therefore, 49% say fast international delivery is a must.

Customer service calls spike

Gladly, a customer service platform, says expect a spike in customer service calls during the holiday season. Here are some of their tips:

  • When to get ready: Last year their customers experienced a spike in customer service conversations during the second week of December followed by the week of Cyber Monday.
  • What channels to perfect: Chat volumes tend to go up in October and November, before the last minute shopping cycles start—but in mid-December, phone and emails increase significantly.

RELATED: 5 Ways to Grow Your Non-Retail Business During the Holidays

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