What Opportunities do the Holidays Present for Small Businesses?
The 2021 holiday season is going to be a bumpy one. Supply chain issues are expected to cause shortages across the board and major retailers are scrambling to find ways to ensure shoppers are still able to rush home with their treasures.
It’s a situation that puts small businesses throughout the country in a unique position. Beyond the usual problem of having to compete against retail giants who have sizable online presences and can undercut their prices without any noticeable income to the bottom line, they’re often facing the same supply challenges.
There are actually some signs of hope for small- and microbusinesses in the coming months, though there are plenty of obstacles to avoid. Microbusinesses (those with between one and five employees and less than $50,000 in start-up capital) and small businesses play a critical, but often underappreciated role in local economies.
“They provide local jobs and serve local communities, but they get a pat on the head for the cuteness factor,” says Erin Igleheart, program director of the Start:ME Accelerator Program at Emory University’s Goizueta Business School.
Collectively, those tiny businesses employ 41 million people and have a $5 trillion economic impact, says Igleheart. They’re small on an individual basis, but when viewed as a unified entity, they’re essential. And this holiday season is a critical one.
“It goes without saying that the last two years have been incredibly challenging for small business,” says Igleheart. “[Owners] have lost access to child care and are running Zoom school out of their home and trying to keep their business afloat. Some people are reaching the fraying point. They’ve been trying to build and stabilize for so long, so without a strong holiday season, I think you’ll see some people say ‘I just can’t’ and set their business aside.”
Small and microbusinesses have a few things working to their advantage, though. Shoppers, for the past two years, have prioritized minority-owned businesses, with more than half seeking out woman-owned businesses. Additionally, many small businesses are producing their products or services themselves or sourcing them locally. That could help them avoid some of the supply chain issues big box stores are facing.
That’s all dependent, though, on customers coming into the store. As COVID-19 vaccinations increase, mask mandates are lifted and people begin to feel better about crowds, some are more open to venturing into brick-and-mortar stores. But the “buy local” movement that had such momentum a few years ago isn’t quite the force of nature it used to be. “It has lost a little bit of steam as people have become disconnected from their community,” admits Igleheart.
The other threat, of course, is changing consumer habits. It’s a lot easier for people to sit on their couch in sweatpants and order something online than it is to go out and visit a small retailer. And the pandemic has only reinforced peoples’ inclination to do their shopping via their phone or laptop.
On the other hand, half of the consumers surveyed by New Union Bank in November said they would be willing to spend an additional $10 to support small or local businesses, though they do hope to see sales and promotions. And service, as always, is crucial.
“Providing a cheery holiday experience and offering free local delivery could go a long way to standing out from larger big box stores that are otherwise struggling with supply chain issues and labor shortages,” the report said.
Some 77% of the people surveyed said they were likely to shop in-person at small businesses. However, an equal percentage were likely to shop at large retailers, reflecting a deprioritization among shoppers of local companies, compared to last year. (Last year, 65% said they’d shop in person at small stores vs. 59% large retailers.)
"Now more than ever, small business owners need to be creative and consider prioritizing low-cost, easy strategies to help motivate consumers to shop with them this holiday season," said Todd Hollander, head of business banking and small business for Union Bank. "Fortunately, it's not too late – something as simple as creating a spirited ambiance with holiday décor and music, or offering free local delivery, could go a long way in motivating customers to choose a small business over a major retailer."
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