As the holiday season approaches, small businesses are gearing up for what many consider the most critical time of year. However, the economic landscape in 2024 presents unique challenges that are reshaping how these enterprises approach their end-of-year strategies. Constant Contact has a holiday report which gives some deeper insights.
Related articles: How Small Business Owners Can Improve Holiday Sales. Constant Contact Report Shows It’s Important.
Inflation Continues to Squeeze Consumer Spending
The lingering effects of inflation are taking a toll on both businesses and consumers. A staggering 89% of small businesses report being impacted by inflation, forcing many to make difficult decisions.
Nearly half of consumers say they’ve had to reduce spending at small businesses due to rising prices. This represents a dramatic shift from just two years ago, when only 27% expected to cut back.
Small businesses are responding to these pressures in various ways:
- 46% have cut expenses
- 39% have raised prices
- 24% are focusing on improving operational efficiency
The Holiday Rush: High Stakes and High Stress
For many small businesses, the holiday season is make-or-break time. Nearly half attribute more than 25% of their annual sales to this period. Some sectors, like retail and ecommerce, are even more dependent, with a quarter getting at least half their yearly revenue during the holidays.
This reliance on end-of-year sales creates immense pressure. One-third of small businesses say they feel the most strain to drive revenue in the fourth quarter (October-December).
Planning Ahead: A Missed Opportunity
Despite the importance of the holiday season, many small businesses are waiting too long to prepare. Almost half don’t start holiday planning until October or later – precisely when they’re busiest and most stressed.
This procrastination could be a costly mistake. Over half of consumers say their preference for shopping with small businesses remains consistent year-round. Additionally, 99% report revisiting the same businesses each holiday season.
Experts suggest that planning a holiday strategy as early as September – or even earlier – can give small businesses a significant advantage.
Marketing Strategies: Small Tweaks for Big Impact
Rather than completely overhauling their approach, most small businesses (46%) plan to make minor adjustments to their existing marketing strategies for the holidays. This might include giving current campaigns a festive spin or offering special promotions.
The most effective holiday marketing tactics, according to small businesses, include:
- Discounts and sales
- Bundled offers
- Exclusive or early access deals
Interestingly, businesses with the most successful holiday strategies are twice as likely to implement customer retention programs like loyalty rewards.
Digital Marketing Channels Lead the Way
When it comes to reaching customers during the holidays, small businesses are increasingly turning to digital channels:
- 32% say social media marketing has the biggest impact
- 19% rely most heavily on email marketing
- 10% focus on event marketing (in-person or virtual)
However, 20% of small businesses admit they don’t have a way to measure the impact of their marketing efforts – a significant blindspot given the importance of the season.
Consumer Sentiment: Price Sensitivity and Support for Small Business
Despite economic concerns, there’s a silver lining for small businesses. Over three-quarters of consumers (78%) say they plan to shop at a small business they’ve never purchased from before this holiday season.
What drives consumers to shop small during the holidays?
- 62% cite competitive pricing
- Many seek unique products or services they can’t find elsewhere
- Convenience is also a significant factor
Looking Ahead: Keys to Success
As small businesses navigate the challenging economic landscape this holiday season, experts recommend:
- Start planning early – don’t wait until October
- Focus on customer retention and loyalty programs
- Leverage digital marketing channels effectively
- Make data-driven decisions about promotions and marketing tactics
- Improve operational efficiency to offset rising costs
By taking these steps, small businesses can position themselves for success during this crucial time of year, despite the economic headwinds they face.
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