A new report from Intuit QuickBooks highlights the critical role of holiday sales in small business success, even as consumer spending is expected to decline by 34% compared to last year. The 2024 QuickBooks Holiday Shopping Report, based on surveys of U.S. consumers and small businesses, reveals strategies and trends for navigating this holiday season’s financial landscape.
Consumers Cut Holiday Budgets Amid Inflationary Pressures
The report projects total consumer holiday spending to reach $211 billion this year, marking a $85 billion decline compared to 2023. Rising costs of essentials like groceries and gas are driving nearly a quarter (23%) of consumers to reduce their holiday budgets.
Small businesses, which rely heavily on seasonal revenue, are expected to feel the strain. On average, consumers plan to spend $294 at small businesses this holiday season, a sharp 40% drop from last year’s $485. Small business owners estimate that holiday sales will account for 33% of their total annual revenue, and 61% identify seasonal earnings as pivotal to their success.
Despite these challenges, consumer loyalty to small businesses remains strong. According to the report, 93% of surveyed shoppers, representing an estimated 240 million people, plan to shop small, creating a $76 billion revenue opportunity for small businesses.
Emotional and Practical Drivers of Shopping Small
Consumers cited emotional connections and unique offerings as key motivations for shopping small. Nearly half (47%) said they prefer small businesses to larger retailers because they want to support their communities and entrepreneurial efforts. Another 52% pointed to the ability to find distinctive, high-quality gifts as a major factor.
Strategies for a Competitive Holiday Season
To adapt to the anticipated spending downturn, small businesses are taking proactive measures:
- Early Preparation: Over 40% of small business owners began holiday planning in September or earlier, focusing on marketing (34%), inventory stocking (33%), and planning discounts (33%).
- Leveraging Digital Tools: The report advises businesses to utilize AI and marketing platforms like QuickBooks and Mailchimp for personalized campaigns, targeted discounts, and optimized operations.
- Expanding Social Media Presence: Social platforms like Facebook, Instagram, and TikTok are gaining traction as shopping destinations, with 52% of small businesses planning to sell on social media this season.
“Consumers are faced with tough financial constraints, and are increasingly looking for flexibility and convenience in how they shop and interact with businesses, as well as deals and offers to offset costs,” said Joseph Black, director of Product Management, Accounting, and Commerce at Intuit QuickBooks. “However, our research shows that despite plans to spend more conservatively, consumers want to support small businesses and 31% of shoppers plan to spend more at small businesses than they have before. To capture this desire to shop small, business owners should leverage digital tools to effectively manage inventory, tailor their marketing, share deals where shoppers are looking most, and leverage AI-powered tools to streamline day-to-day operations and optimize their selling potential.”
Key Shopping Dates and Inventory Management
Black Friday (November 29) and Cyber Monday (December 2) are expected to remain dominant shopping days, with 65% of consumers planning to shop on these dates. However, Small Business Saturday (November 30) is also gaining importance, with consumers planning to complete 39% of their shopping on this day.
Small businesses are encouraged to prepare inventory early to meet demand, ensuring popular products are well-stocked for these peak shopping events.
Image: Envato
