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All signs point to a relatively solid holiday season for America’s small businesses. Yet, owners of these businesses appear to have a collective anxiety about the months ahead.
They have their customers to thank on both counts.
Americans kept up their spending over the summer, witnessing the government’s estimate that the economy grew by 4.9% in the third quarter. Yet even as they open their wallets, consumers seem pessimistic about their finances. A recent AP-NORC (Associated Press-National Opinion Research Center) poll found that many Americans are concerned about their financial future.
In turn, after two years of a COVID-fueled sales boost, owners fear consumers have run through their pandemic savings and might cut back this holiday season or shop online again after getting out and supporting local businesses. Inflation is still a concern and interest rates are higher. And there’s no predicting the weather.
“When we talk to retailers there’s a lot of uncertainty,” said Max Rhodes, CEO of Faire, an online wholesale marketplace many small retailers use to buy inventory. “The combination of higher inflation and rising interest rates are making consumers nervous which in turn makes retailers nervous. It continues to be a weird economy. The data looks good, but nobody feels good about it.”
Rhodes said his customers started to search for “Christmas” items starting in mid-August, compared with mid-September last year. Buying early can relieve the stress of supply-chain bottlenecks and gives owners a chance to restock if something sells out early in the season.
For many retailers, the holidays can account for more than half their annual sales. Holiday retail sales are expected to increase between 3% and 4% in 2023, according to trade group the National Retail Federation. But the total value of those sales will grow more slowly because inflation has moderated. In 2022, sales jumped 5.3%, according to the NRF.
Early indications are that sales have kept pace with prior holiday seasons, with consumers making purchases that help them temporarily put aside their financial concerns.
This article was provided by The Associated Press.