Small business owners have quite the holiday season ahead of them. Overall, retail sales in November and December —excluding automobiles, gas and restaurants —are expected to increase 3.6% over last year, according to the National Retail Federation.
And, as businesses gear up for the holiday season, they are optimistic about sales and predict growth for the next quarter and into 2017, according to the American Express Holiday Growth Pulse, a survey of 1,502 small and middle market businesses across a variety of industries.
Specifically in the retail industry, nearly six in ten (59%) small business retailers (companies with fewer than 100 employees and annual revenues of $250,000 or greater) think holiday sales will be stronger compared to last year, and 34% think they will be roughly the same as last year.
Small Business Saturday marks the start of the busy holiday shopping season for small retailers, and holiday sales are a significant indicator of future growth for many of these businesses. Nearly six in ten (59%) small business retailers see their potential for growth in 2017 as being contingent on a successful holiday season.
“Retailers are optimistic about the upcoming holiday season and the impact it will have on their growth in 2017,” said Susan Sobbott, President of Global Commercial Payments at American Express. “As small business retailers gear up for this critical season, many are offering promotions to draw customers in, and hire additional staff to ensure quality customer service during the busy season.” Thirty-one percent of small business retailers plan to add staff according to the survey.
Small businesses to be more aggressive in discounts and promotions
Given the importance of the holiday season, small business retailers are putting a great deal of effort into making sure they see strong results. Sixty-four percent of small business retailers think they will need to be more aggressive in sales and promotions in order to stand out. As a way to raise their company’s profile, 89% of small business retailers will utilize social media this holiday season; of those, the greatest number are using Facebook (81%).
More than two-thirds of small business retailers (67%) say their company will be offering holiday discounts this year. Among those offering holiday discounts – 58% will start offering holiday discounts the same time as last year, while 42% will start offering holiday discounts earlier.
As small businesses across a variety of industries anticipate a successful holiday season, they plan to spend more than last year to thank current customers with gifts and reward employees with more generous holiday parties. More than seven in ten (71%) small businesses will spend money on holiday gifts for clients or customers this year. On average they will spend a total of $6,700; an increase of $1,330 over 2015.
Women-owned businesses handling holiday sales differently
According to the American Express Holiday Growth Pulse survey, many women-owned businesses are handling holiday sales differently than those owned by men.
Compared to men, more women feel that they will need to be more aggressive with holiday sales and promotions (48% versus 44%). However, male small business owners are more likely to offer holiday discounts (32% versus 27%) and earlier (42% versus 34%).
Male business owners are more likely to hire additional staff for the holidays (18% versus 14%) and sought additional funding for their business to adequately prepare for the holiday season (29% versus 26%).
Lastly, while female business owners are more likely to view employee productivity as a concern during the holidays (44% versus 39%), only one-third of women-owned businesses are planning to pay their holiday staff more than last year compared to 50% of male business owners. That frugality also applies to the gifts female business owners plan to send to their clients. On average, female entrepreneurs will spend a total of $3,300 on client gifts, while male business owners plan to spend an average of $10,400.
“Perhaps male business owners are being careless in their spending,” noted Sobbott. “Or, perhaps female business owners have something to learn from their male counterparts who believe that ‘it takes money to make money’.”