As big retailers worry about holiday sales, SMBs are poised for success

Much has been written about the excess inventory faced by large retailers such as Walmart (NYSE: WMT) and Target (NYSE: TGT) and online-only outlets such as Amazon (NASDAQ: AMZN), but that hasn’t dampened the outlook for holiday sales, just lowered expectations.

Deloitte, in September, predicted holiday sales it would rise between 4% and 6% this year, totaling $1.45 trillion to $1.47 trillion in the November-January period. That follows a 15.1% increase in 2021. Deloitte also expects e-commerce sales to grow 12.8% to 14.3% year over year to reach $260 billion to $264 billion this season . This year, compared to previous seasons, it will be muted, but it may still offer some holiday cheer.

“The lower growth forecast for the 2022 holiday season reflects the slowdown in the economy this year,” he explained. Daniel Bachmann, Deloitte’s US economic forecaster. “Retail sales are likely to be further affected by the decline in demand for consumer durables, which had been the centerpiece of pandemic spending. However, we anticipate more spending on consumer services such as restaurants, as the effects of the pandemic continue to wane.”

He added that “inflation will also help boost sales in dollar terms, although retailers will see less growth in sales volume.”

Now comes a report that suggests small and medium-sized businesses are particularly poised to benefit this season.

Capterra, which produces business software, surveyed 306 small and medium-sized retail companies in its 2022 Holiday Retail Preparation Survey to assess their outlook on the season. While large retailers have plenty of inventory, supply chain issues over the past two years have made life difficult for SMEs.

Inventory on hand

Key findings include that 75% of SMBs believe they have the right amount of inventory on hand and 63% expect higher holiday profits compared to 2021. Advertising will increase on social media, with 61% of SMEs indicating that they expect to increase. increase social media marketing spend. Forty-five percent expect to offer more holiday deals this year in an effort to attract shoppers who are battling inflation.

SMBs are increasingly targeting Gen Z and Gen Alpha shoppers, hoping that spending will decrease among older shoppers, but not among younger generations with young children, teenagers and young adults Retailers targeting these age groups expect higher seasonal profits compared to 63% targeting millennials and 54% targeting Gen X and Boomer audiences.

In addition to increasing social media spending, 85% of SMBs expect to increase holiday marketing spending in one or more channels, including e-commerce marketplaces and search engine optimization.

“From proactive inventory management to social media marketing, SMBs are pulling out all the stops to get clicks and foot traffic this holiday season,” said Molly Burke, senior retail analyst at Capterra. “Whether consumer spending supports SMB projections is an open question, although most retailers are confident they will enter 2023 with healthy holiday profit growth compared to large retailers.”

More optimistic hybrid operations

Retailers with both digital and physical store presence are more optimistic, with 68% expecting profit growth this year, compared to 59% of e-commerce-only businesses and 51% of brick-and-mortar-only businesses and mortar Among businesses with an online and offline presence, 62% expect their online channels to perform better in 2021, while only 38% expect their stores to do the same.

“All this SMB optimism is remarkable, given that experts expect retail sales nationwide to grow minimally, if at all, after adjusting for inflation, and Gartner finds that about a third of consumers Americans will spend less during the holidays this year,” he said. Burke.

Buying inventory ahead of time can be a big help for SMBs. Having learned from last year’s supply chain chaos, more SMBs ordered this holiday inventory earlier this year. Among those entering the season, 89% said they had balanced inventory levels and only 3% said they were overstocked, compared to 67% and 8%, respectively, who asked same time as last year. Of those who delayed purchasing, only 27% said they had a balanced inventory, 33% said they were out of stock, and another 33% were unsure of their status.

Shipping Holds

Although they are hopeful of a good season, SMEs are facing shipping headwinds. The survey found that more SMEs this year will offer delivery benefits to try and compete with the big brands, many of which offer free next-day and even in some cases same-day delivery.

Capterra noted that 55% of holiday shoppers aren’t willing to pay for shipping, but SMBs still lag in this area, with just over half expected to offer free shipping. Only 16% of small retailers will offer same-day or next-day package delivery. With online shopping and consumer appetite for lightning-fast delivery showing no signs of slowing down, fast last-mile logistics marks a much-needed growth area for small retailers in the near future.

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