The National Retail Federation (NRF) forecasts a 2.2% increase in sales this year. This, they are quick to point out, is about half the average holiday sales growth over the last ten years but, what they don't point out is that it is not much less than the 2.4% growth in sales during the 2007 holiday shopping season.
Consumers anticipate spending about $830, on average, this holiday season. That figure represents a 10% decrease from last year's average holiday spending, and includes gifts for family, friends and colleagues, decorations, flowers, candy and food, cards and postage. It also includes an expected average of $120 each on non-gift purchases made for themselves or their households by sharp-eyed consumers on the lookout for holiday sale prices.
So, what can the small business retailer do to maximize the season for their bottom line in an economic climate like this, when they really can't compete on price?
One thing you can do, whether you are a Main Street retailer or an Internet pure play, is to focus your attention on the Web. Consumer research suggests that more than a third of holiday shoppers will find their purchases influenced by pre-buying online research. In fact, one of the characteristics of what the NRF calls this year's "big spenders" is that they research items online before buying in-store.
- Fortunately, the new and improved Google Product Search (once known as Froogle) will let you list your products there for free; unlike some other online comparison shopping sites. And, as might have been expected of Google, the reach of their product search engine is enormous.
- Be prepared to offer some form of free shipping promotion if you want to stay competitive, too. It may require a bit of bullet biting, given the state of gas prices; although they have started coming down, much to everybody's relief. Still, you may find you have to cut costs elsewhere but that may be well worth it, if it saves your holiday sales season from a crash and burn.
- Keep an eye on the calendar, too. Consumers have already started doing their holiday shopping and, in fact, the "early birds" will have gotten 75% of it done by Halloween. It may be too late to catch this desirable bunch of shoppers who tend to be more affluent, better educated and older; but there are still plenty of holiday shoppers out there. Only about half of consumers had completed their holiday shopping within ten days of Christmas day.
- Of course, the online equivalent of retail's Black Friday is Cyber Monday. Black Friday falls on the Friday after Thanksgiving when, officially, the Christmas shopping season begins. But enough sneaky spouses head off to work on the following Monday to spend time buying gifts online from the office, that Cyber Monday was born. Be ready for it, with whatever promotions and bells and whistles make sense for the product you sell and your target market. If you find that your free shipping promotion has eaten a hole in your marketing budget, look around for smart online partnerships that will allow you to extend your reach without creating awkward competitive situations for you.
- Gift cards will be a popular gift this year and, while actual cards may not be an option for you, see if you can come up with an electronic version that your customers can digitally send as a gift. Since you'll be sending it for them by email, you can even offer to let them buy it and arrange to have the email sent automatically on Christmas Eve; or any other date they'd like. Be smart and use the technology at your disposal to make your customers' gift buying experience as convenient as possible.
- Since you can't compete with the discount chains on price, be sure to do all you can to treat each customer like gold. Have all your customer service ducks in a row and don't underestimate the opportunity of the season to turn holiday gift buyers into regular customers. With all the frayed nerves, tight budgets and last-minute hysteria of this time of year, prompt and cheerful service can take you a long way into the new year.
About the Author: Dawn Rivers Baker, an award-winning small business journalist, regularly reports and analyzes small business policy and research as the editor and publisher of The MicroEnterprise Journal. She also blogs at The Journal Blog. Dawn is a member of the Small Business Trends Expert Network.