Small business owners know how important fourth-quarter consumer spending is to their bottom line. Retailers, in particular, rely on seasonal holiday sales to buoy their books for the rest of the year, when monthly receipts are not as brisk. As crucial as the Christmas economy is to retailers, stores and e-commerce sites are not the only beneficiaries of a robust fourth-quarter spending uptick. When consumers loosen their purse strings, restaurants and other service industries also reap rewards.
With so much at stake during the prime selling season, you can’t afford to miss out on the consumer spending spree seen in November and December. These tips can help you make a strong showing, finishing the year with the business boom you need to carry you in to 2019.
Fourth-quarter Spending Forecast is on the Rise
The National Retail Federation (NRF) conducts research before each fourth-quarter selling season, projecting spending for the year-end months. The helpful data gathered by the organization offers insight into shoppers’ mindsets, leading up to the consumer whirlwind. This year’s October survey show’s an optimistic forecast for the upcoming shopping season, predicting retail receipts will rise quite a bit, compared to last year’s spending.
According to the NRF study, consumers say they’ll likely spend more than $1007 during this year’s holiday season. The figure represents a 4.1% increase over last year’s holiday spending responses, which pointed to a spending total of $967.13 for each consumer. It is thought the spending breakdown could shake out like this:
- Gifts for family, friends, and colleagues could top $638 per person.
- Consumers believe they’ll spend about $215 on food, décor, and other non-gift holiday purchases.
- In the course of holiday preparations, shoppers will each spend approximately $155 on personal purchases and non-gift items for family members.
Although 18 % of respondents identify as early-bird holiday shoppers, already underway by September or earlier, 40% report they’ll be Christmas shopping by the first of November.
Reaping the Benefits of Consumer Confidence and Economic Health
The NRF points to strong consumer confidence and a healthy economy as contributing causes, pushing the holiday spending forecast higher than it was, last year. The group predicts actual holiday spending will grow to a 2018 season total of more than $720 billion, up from the 2017 spending total of about $717 billion. The projected increase represents a climb of 4.3-4.8%, which exceeds the annual average increase of less than 4% seen during the past five years.
Well-positioned retailers saw gains last year, compared to 2016, resulting from strong wage and employment conditions, as well as consumers anticipating tax cuts. If forecasts hold, the trend may continue this year. Not only do wages and job figures remain strong, but increased net wealth and well-controlled inflation may further contribute to confident seasonal spending.
It Only Happens Once a Year
The holiday shopping season builds slowly, and then burns white hot for about a month. If you’re not ready to seize the opportunity, fourth-quarter fortunes are left on the table – and you won’t have another chance at sales success, until next year. These recommendations can help you cover all the bases this season.
- Create Excitement – The holidays are abuzz with excitement, so it’s easy to get lost in the fourth-quarter fanfare. In order to stand out, you should schedule special events at your retail locations during the prime shopping season. Large numbers of people are already out and about, so it’s a good time of year to generate interest. And by turning a shopping outing into a destination event, you give potential customers every possible reason to visit your store – and stay for a while.
- Staff Your Store With Assets – Your employees not only serve customers during the holidays, but they also represent your brand. The fourth-quarter retail experience can be intimidating, particularly for inexperienced sales associates and other team members, unaccustomed to the holiday hype. Intensive training, which never ceases, can help prepare newbies for the holiday blitz. And when overwhelming holiday demands test the limits of your retail operation, it’s up to you and your managers to lead by example, maintaining an even demeanor through the roughest retail patches.
- Try to Connect – Pulled in multiple directions, at once, it can be hard to make personal connections with customers during the fourth-quarter holiday shopping crush. Despite the harried seasonal flow, it’s important to leave every customer with a positive impression. Many people shopping your store during the holidays are first-time customers, so repeat business relies on your ability to establish positive connections – even if it means spending a little more on payroll, or scheduling a knowledgeable “floating” sales associate to cover peak times.
- Maintain Enough Inventory – Retailers are familiar with the gamble leading up to the holiday season, attempting to foresee hot sellers and secure the right inventory for their stores. Once the season’s in full swing, you may not be able to quickly resupply, so building a solid inventory prior to November ensures a strong start to your seasonal selling. It’s also important to stagger releases and schedule new product arrivals during the fourth quarter, providing shoppers with fresh, unseen merchandise, from which to fill holiday wish lists.
- Start Planning for Next Year – Some of the most valuable retail lessons emerge in the heat of holiday selling. Though your hands may be full with what’s before you, it’s important to learn and prepare for next year. While the experiences are fresh in your mind, spend time noting sales trends, staffing lessons, and other direct takeaways you can use to do a better job in the future. And consult sales associates for feedback about operations – they have critical information about customer experience and other aspects of your holiday season performance.
When holiday shoppers are ready to embrace the spirit of the spending season, small businesses need to be prepared; there’s no substitute for strong fourth-quarter sales. Forecasts point to a prosperous 2018 season for well-positioned businesses, so there are plenty of reasons for retailers to roll out the red carpet for holiday shoppers, and set the stage for success.