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For Your Small Business Sydney Sladovnik November 21, 2023

Consumers Pulled Back on Shopping in October. Are Your Holiday Projections Still Safe?

Americans pulled back on spending in October, suggesting that early holiday sales may have fizzled. But all is not lost for business owners.

Retail sales slipped 0.1 percent in October according to the latest consumer spending report from the Census Bureau--the first decline in six months yet a smaller drop than economists predicted. One possible reason, according to Intuit Quickbooks's recent findings: early Black Friday sales didn't work. Nearly three-quarters of consumers began saving for their holiday shopping in September of this year, or earlier--and not spending according to the Quickbooks report.

In spite of retailers' best efforts, the majority of consumers plan to shell out for gifts during the traditional shopping season--that is, in November and particularly over the cyber week and Black Friday shopping holidays. A third of those surveyed (34 percent) are also expecting holiday bonuses to drive their spend, all of which could explain the lackluster month of October.

While Quickbooks' report says that small businesses can expect a 42 percent increase in consumer spending over the holiday season, inflation continues to pinch, as both shoppers and owners prepare for a "gloomy" remainder of the year, according to NFIB's chief economist Bill Dunkelberg. The Conference Board's 2023 holiday survey suggests that shoppers plan to spend an average of $21 less due to inflated prices, specifically $985 per person on holiday-related items this year. Dana M. Peterson, chief economist at the Conference Board proposes that consumers are "entering the holiday season in a somewhat cautious mood, with the overall, present situation, and expectations indexes all seeing dips," she said in a press release.

Melodie van der Baan, co-founder of West Palm Beach, Florida-based overstock marketplace Max Retail, adds that consumer sentiment is another factor to consider for October's lull. She saw sales spike the first week of the month, but as attacks in the Middle East unfolded, peoples' attention shifted into world focus rather than US spending. Since the holidays bring a sense of closeness and togetherness, shoppers will likely resume their plans to buy, especially for others, Baan says.

Shoppers over the age of 45 plan to spend more, but considering that Gen Z and younger audiences are leading the forecasted $221.8 billion holiday spend, their ability to keep up with inflated prices could be the main concern for brands as they head into the holidays.

Connect with an Old National Small Business Banker for more insights to help your business grow.

This article was written by Sydney Sladovnik from Inc. and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

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