Holiday spending at small businesses projected to rise
Consumer intent to shop at small businesses has nearly doubled since 2024, yet experts warn that competing solely on discounts is a risky strategy.
A recent survey conducted by Constant Contact indicates that the share of consumers planning to increase their holiday spending at small businesses has climbed to 20.2 percent, up from 11 percent in 2024. Constant Contact CEO Frank J. Vella noted that business owners report high confidence levels as consumers signal increased support for local entities this season.
While 52.6 percent of shoppers identify discounts as their primary incentive for choosing small businesses, analysts suggest this reliance on price cuts may be unsustainable. Ernie Goss, a professor of economics at Creighton University, warned that small businesses struggle to compete on price against global online retailers, noting that margins can quickly become negative if firms discount below their acquisition costs.
The current economic environment is characterized by a bifurcated market, where holiday spending is primarily driven by higher-income households. Given this trend, experts advise that small business owners should prioritize enhancing the overall customer experience rather than relying exclusively on deep discounting, which may not be enough to fend off larger competitors.