PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Holiday Shopping Season Off to a Nice Start for Small Business

By at 28 November, 2018, 8:56 am

Small Business Insider

by Raymond J. Keating-

When talking about the retail business, you’re talking small business. According to the latest Census Bureau data, for example, among employer firms in the retail trade business, 80.4 percent have fewer than 10 employees, 91.1 percent fewer than 20 employees, and 98.4 percent fewer than 100 workers. Retail businesses overwhelmingly are small businesses.

So, when we look at the Christmas holiday shopping season, we’re very much getting a read on how well the year is going to turn out for small retailers.

With Black Friday, Small Business Saturday and Cyber Monday behind us, what’s the early take on the holiday shopping season?

Consumer Confidence is Strong

First, it must be noted that the latest measure of consumer confidence from the Conference Board showed that their index was down in November compared to the previous month, but that consumer confidence remains at “historically strong levels.” Lynn Franco, Senior Director of Economic Indicators at The Conference Board, noted, “Consumers’ assessment of current conditions increased slightly, with job growth the main driver of improvement. Expectations, on the other hand, weakened somewhat in November, primarily due to a less optimistic view of future business conditions and personal income prospects. Overall, consumers are still quite confident that economic growth will continue at a solid pace into early 2019.”

This strong outlook among consumers was reflected in the early holiday shopping season numbers being reported. Consider the following, for example:

● Small Business Saturday. According to the 2018 Small Business Saturday Consumer Insights Survey, a total of 104 million U.S. consumers reported shopping or dining at small businesses on Small Business Saturday, spending an estimated record high of $17.8 billion.

● Black Friday. The International Council of Shopping Centers (ICSC) reported that “an estimated 151 million people visited a mall or shopping center over the weekend,” and that on Black Friday “49 percent of shoppers spent more than in 2017, and 30 percent spent the same as last year.” The ICSC survey also made clear that the combination of physical and online sales channels is a major plus: “Omnichannel retailers – those with a physical and online presence – were overwhelmingly the preferred destination for holiday shoppers, capturing 88 percent of spending on Thanksgiving Day and Black Friday, demonstrating once again that having multiple options for consumers to take advantage of is a winning strategy.”

● Cyber Monday set records. According to a report from ChainStoreAge.com, online shopping on Cyber Monday was on track to increase by 19.7 percent over last year, hitting a record of $7.9 billion, and mobile transactions were up by 55 percent.

A November 26 Forbes.com analysis made note of several important trends to take note of, including the records being set in online sales for Cyber Monday: “American consumers were on track to spend $7.8 billion and make it the biggest online shopping day in U.S. history, according to Adobe Analytics. That follows record online sales for both Black Friday and this past weekend.”  In addition, it was noted, “Not only did Black Friday, a day once synonymous with in-store shopping, see the day’s biggest online sales ever of $6.2 billion, but online orders from consumers choosing to pick up in stores surged 73% from Thursday to Friday, according to Adobe.”

● High growth clearly is in the online retail realm. However, it also should be kept in mind that as of the third quarter of 2018, according to the Census Bureau, e-commerce sales account for 9.1 percent of total retail sales (that compared to less than 4 percent in early 2009).

Bloomberg News noted strong sales over the holiday shopping weekend: “Black Friday weekend sales data from third-party analytics providers indicate a merry start to the holiday season, with online sales taking more share — even ahead of Cyber Monday. Four-day Black Friday weekend sales totaled about $60 billion, according to Customer Growth Partners. Consumer electronics and appliance sales rose 6.4 percent, vs CGP’s estimate of 6.1 percent growth, while apparel sales rose 5.4 percent, in line with the firm’s projection, but still the best growth since 2011.”

Finally, it’s worth noting that these positive retail sales numbers for the start of the unofficial holiday shopping season line up with a strong 2018 for retail sales overall and the consumer. As noted in the Census Bureau’s latest look at retail sales, through the first ten months of 2018 compared to the same period last year, retail and food service sales were up by a solid 5.4 percent. For good measure, personal consumption expenditures accounted for a significant share of GDP growth in both the second and third quarters of this year, according to U.S. Bureau of Economic Analysis data.

If the holiday shopping season continues to exhibit strength, 2018 will turn out to be a solid one for retailers, and that means for small businesses.

_______

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

News and Media Releases