How Small Businesses Can Attract Holiday Shoppers in a Downturn

Many small company owners are growing more worried about how a potential recession will affect the crucial holiday shopping season as the danger of an economic collapse approaches. To make ends meet, many companies frequently rely significantly on a winter sales boost. However, a record-breaking 41% of recently surveyed SMBs reported being unable to make their rent payments on time in November, and 73% reported a severe fall in consumer spending. What can small businesses do to survive the storm and draw customers during a holiday season marred by financial difficulties?

We polled 550 varied U.S. consumers and spoke with close to 50 small company owners to investigate this subject. Furthermore, just 18% of the customers in our poll indicated that they would be prepared to spend additional money in order to support small, local businesses when purchasing Christmas gifts. This is despite the fact that more than half of them believed it was crucial to do so.

This phenomenon is not brand-new. According to a 2008 McKinsey report, consumers were being pressured to prioritize price over factors like service level, distinctiveness, or quality as a result of the Great Recession’s rising unemployment and inflation rates (where small businesses tend to shine). With alternatives like department shops or Amazon as alternatives, shoppers in our study stated they planned to spend less than one-third of their Christmas shopping budgets at small companies. Due to financial constraints, 48% of consumers said they would make fewer purchases at small firms this year.

Having said that, our data also indicates that small companies can take a number of measures to solve the challenges that prevent customers from purchasing locally and maintain their ability to draw holiday customers, even when their budgets are more limited:

1. Address the price gap.

Price was the main issue that our customers raised in relation to buying at small businesses. Nearly 60% of respondents indicated they would shop at small companies less this year because they were more expensive, and more than 70% said they thought local firms’ prices were greater than those at major shops. One responder said, “In the past, I have made it a priority to shop at small companies.” But I can’t deny that my dollar sometimes goes further at large box stores or on Amazon because inflation is picking up this year.

How Small Businesses Can Attract Holiday Shoppers in a Downturn
How Small Businesses Can Attract Holiday Shoppers in a Downturn

Small businesses do, of course, occasionally charge greater prices, but that doesn’t mean they can’t allay customers’ worries by offering deals and discounts. Many of the business owners we spoke to provide incentives like price reductions, free delivery, or free gift cards with a purchase in order to appeal to consumers who are becoming more price aware. In addition to being a highly desired gift in and of themselves, gift cards can be made even more appealing if they come with a benefit to the buyer (for example, receive $10 in store credit for every $50 you spend on gift cards).

The importance of thinking creatively to close the price gap and pique consumers’ interest in your brand was also stressed by our interviewees. A lottery bag filled with a variety of well-liked products presented in-store and online, a surprise flash sale, or a “25 days of Christmas” or “8 nights of Hanukkah” giveaway can all increase engagement and drive more traffic than a straightforward sale.

2. Get online.

The second top issue raised in our study was the lack of online buying choices for small businesses, which 37% of respondents said would cause them to do their holiday shopping elsewhere. However, even though many small businesses do not have the funds to create a whole unique website, there are several lower-lift solutions that can have a significant impact.

Importantly, this goes beyond simply learning how to use technology. While many of the older business owners we spoke with found it difficult to use new digital tools, younger owners who were more accustomed to them frequently found it difficult to maximize their online presence, spending a lot of time and effort promoting their company online without obvious results. There are actions everyone can do to enhance their presence online, regardless of whether you are unclear of how to exploit these platforms or simply don’t have the time (who does?).

First, think about approaching nearby institutions or colleges and pitching your company media plan as a class assignment if you’re searching for free or inexpensive support. Helping you out could be beneficial for both of us since many marketing or entrepreneurial courses encourage students to gain real-world experience.

Next, keep in mind that you can increase your online presence without having a separate website. You can increase awareness without making a significant expenditure by choosing the appropriate communication channels to reach your audience, whether those be Facebook Marketplace, Instagram, TikTok, an email newsletter, or some other site. Make sure your company is featured on well-known internet directories and review sites, and encourage consumers to provide evaluations on Facebook groups for the neighborhood, your company’s Google listing, or other social media platforms. Since these postings have the potential to go viral and generate a lot more traffic than static websites or social media posts that are strictly informative, several of the business owners we spoke with also reported success with social media freebies that highlighted their most well-liked products.

Frequency and recentness are crucial in the digital age, especially. It’s important to regularly update your online presence because coming seen as out of date or idle harms you more than you would realize. That can be keeping up a daily posting schedule on social media, contacting clients to ensure that you always have updated reviews online, or sending frequent promotional letters to remind clients of your company and entice them to visit again.

3. Help people find what they’re looking for.

The second most frequent worry voiced by consumers in our poll was that small shops typically have a smaller selection, making it more challenging for customers to find the products they need there than at larger outlets.

Create gift guides for her, him, kids, pets, and friends to assist customers find what they’re looking for, either by emphasizing your store’s distinctive offers alone or in collaboration with other small companies. Additionally, if you have a website, make sure it has a “wish list” feature so that customers may create their own lists of presents to give to their loved ones. Additionally, make sure that you and your team are prepared to offer advice when necessary and to respond to any queries!

4. Build a convenient and accessible shopping experience.

Many of our respondents were reluctant to shop at small businesses because they believed it would be more time-consuming, inconvenient, and difficult than doing so at large retailers. Even merely providing time-saving choices, like curbside pick-up or delivery, can significantly enhance your customers’ experience during the busy holiday season.

It’s crucial to keep in mind that various people define accessibility differently. Some business owners discovered that enforcing social distancing or other Covid-related policies was particularly significant to their clients, while others stressed the significance of providing bilingual customer service representatives to assist clients who do not speak English in order to ensure that all clients can easily access the company and its goods.

Business owners can also make an investment in convenience by introducing new goods or services, like free gift-wrapping. The significance of including a gift-wrap option was explained by an electronics reseller, who said: “During the holiday season, I started to include complimentary gift wrapping, [which] saved time [for my customers] down the line… I had to incur some upfront expenses, but I was able to swiftly recoup them once I began to draw in lots of new customers. While my competitors were forced to hang onto their goods, I was able to sell the majority of mine. Not only did I make money, but I also managed to get a ton of great reviews on my page, which helped to establish me as a trustworthy seller and helped my future business!”

5. Embrace what makes your business unique.

In our studies, we examined the challenges and advantages that customers connect with small businesses, and we discovered that the primary motivation for individuals to shop locally was to discover distinctive goods that they couldn’t acquire anywhere else. In fact, earlier studies have demonstrated that purchasing a distinctive product makes customers feel special, and small firms are ideally situated to satisfy this psychological requirement. So, celebrate your individuality!

Naturally, there are instances when this seems counterintuitive. For instance, one store owner described how she often sells extremely distinctive products, but this holiday season she decided to acquire more generic, less expensive items since she knew customers were extra price sensitive. She bemoaned, “Now I am trapped with this inventory and probably will need to lose money in order to get it sold,” since she was still unable to afford to offer them at the same low prices that big businesses could. It’s simple to do, but our research demonstrates that going head-to-head with big merchants is a losing strategy.

Small firms should instead concentrate on creating their own unique value. Even while affordability may be the primary motivator for many holiday buyers this year, they will still be searching for the ideal, one-of-a-kind present and may deviate from their spending plan when they find it.

Focusing on these goods can assist small firms in avoiding direct price competition with larger retailers because it is more difficult to compare unique products with standardized ones. This can entail highlighting particularly unique products on social media or websites, releasing a product exclusively for the holiday season, collaborating with other companies to offer gift baskets filled with a variety of difficult-to-find local products, or even showcasing your store’s holiday décor personality. In the end, buyers visit small shops to discover that unique item they can’t find elsewhere. Therefore, don’t be reluctant to provide them with what they desire!

6. Support your community.

To support their local communities and small companies in order to ensure their survival was the second most often mentioned reason our respondents indicated for opting to shop locally despite the current economic climate. As a result, highlighting your company’s local roots and making sure you’re a force for good in the neighborhood can be wonderful ways to develop client loyalty.

This can be as easy as hanging a sign in the window that reads “support small businesses,” but you can go farther by actively marketing and prominently presenting goods that are specific to your region, created in partnership with other local merchants, or created by local artists. For instance, we went to a neighborhood drugstore that features holiday gift suggestions made by regional artists. The proprietor outlined how this method has aided him in developing a sizable local clientele as well as a network of associate vendors: “Every year I have fresh and distinctive things manufactured by other local small businesses. Customers wait to see what I have to offer this year since they are aware of this. Other nearby companies are aware of this and have contacted me.

Partnering with a neighborhood nonprofit organization is yet another fantastic approach to promote and support your company’s local community. Consider donating a portion of your earnings to a neighborhood cause or asking your followers to choose a local nonprofit for you to support through a social media poll. Customers may be more willing to pay a little bit more if it means supporting a worthwhile cause, especially around the Christmas season when they may be feeling particularly altruistic.

7. Invest in the shopping experience.

Finally, the unique, unforgettable shopping experience is one of the main benefits of supporting a small business, especially during the Christmas season. It goes beyond simply purchasing gifts. It’s all about the ambiance, that unique, contagious feeling we can only refer to as the holiday spirit. And little things can have a big impact when it comes to developing that experience.

Offer coffee or hot cocoa, set out a tray of freshly made cookies, or distribute sampling of seasonal goods. Additionally, you can collaborate with other companies to offer recurring Santa photo shoots, organize eight days of Hanukkah sweets and activities, engage a fortune teller for the New Year or other entertainment, or even host holiday-specific events. One of the hair salon owners we spoke with hosts festive holiday sales events where she offers handcrafted cosmetics. A modest bar owner informed us that around the holidays, they provide themed cocktails. Whatever your specialty, finding a means to offer distinctive experiences will guarantee that clients remember your company (and come back again soon).

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