Small business sees uncertain holidays
Ambitions for year shift from turning a profit to surviving
Nupur Abbas' Worthington gift shop Blissful Trends usually has a storage room packed with products to quickly replace the wares sold during the holiday rush. But a global coronavirus pandemic put a damper on that plan.
“I'm not putting anything in the back,” she said. “If we run out of something, that's it.”
The entrepreneur's ambitions for the year have shifted from turning a profit to surviving.
“My goal is to make enough to pay the bills on the inventory that I bought,” Abbas said.
Holidays are huge for all retailers, including smaller ones such as Abbas. Mom-and-pop stores depend on a flood of customers searching for Christmas gifts in November and December.
“We kind of break even week to week and we make our money in November and December,” said Emilie Smith, who owns Tremont Goodie Shop in Upper
Arlington.
But Smith, Abbas and other small retailers fear this COVID Christmas might be the exception.
“I don't know what to expect going into the holidays, which scares me," Smith said. "That's normally when we make our money.”
The coronavirus pandemic, which has killed more than 5,600 Ohioans since March, shifted consumers to the internet and big box stores. As a result, small retailers are in dire straits headed into the usually frenetic holiday shopping season.
Foot traffic is down at venues such as the Shops at Worthington, and Blissful Trends might see only a handful of customers some days, Abbas said.
This year's holiday spending is expected to fall only marginally compared to 2019. American consumers plan to spend around $650 on gifts for friends and family this year, down $8 from 2019, according to a National Retail Federation survey. Similarly, the 2020 Deloitte Holiday Retail Survey found consumers plan to spend around 7% less in 2020 than in 2019.
The question for retailers: Where will that money be spent?
Daniel Shoag, an associate professor of economics at Case Western Reserve University, noted that holiday spending usually ticks up from the previous year, with the notable exceptions of 2008 and 2009, when the nation was in the grips of the Great Recession.
“I do think more people will buy things online than they have in the past,” he said. “In-person department stores, and discount stores, they'll face a bigger hit than before.”
Digital sales, or e-commerce, have made up only around 10% of retail sales. But that portion is increasing rapidly. According to the Federal Reserve Bank of St. Louis, e-commerce sales rose from 11.8% of all retail sales during the first quarter of this year to 16.1% in the second quarter.
“The last month-to-month I saw was for August, and e-commerce grew like 40%, and it's pretty much on track for
holiday shopping to grow at that rate as well,” said Steve Denunzio, a senior lecturer at the Ohio State University Fisher College of Business.
Even when consumers patronize brick-and-mortar stores, they tend to prefer retailers with a wide variety of products so they can get their shopping done quickly and avoid excessive contact with others, said Amanda Weinstein, an associate professor of economics at the University of Akron.
“By some estimates, those big box stores have been driving more small businesses out of business than the internet,” she said.
A multitude of additional problems stemming from the pandemic weigh on small stores this holiday season.
Black Friday, one of the biggest shopping days of the year, is looming, and retailers worry that pandemic restrictions in concert with rising cases of COVID-19, the disease caused by coronavirus, will persuade Black Friday crowds to stay home.
“Having a lackluster Black Friday means they could be down in terms of profits for the year,” Weinstein said.
The pain from a nearly two-month stay-at-home order this past spring lingers for small shops.
“Obviously, places are already struggling from being closed, and a lot of places can't weather losing a holiday season,” Shoag said.
Several weeks of little to no profit in the spring left Blissful Trends without the cash it needed to buy holiday inventory.
“Everything I'm buying is on loan,” Abbas said. “If you want your store to be running, and ride this out, you have to keep it fresh. If you keep putting out the same stuff that they've seen before, they'll come once, maybe twice and then quit.”
Her family already sold a condominium to help pay some of the debt they've accrued. Nevertheless, Abbas tries to maintain hope.
“Hopefully, things will get better,” she said. “It's just a matter of time.” pcooley@dispatch.com @Patrickacooley