Stores hope for surge in business
Customers set to return this holiday season after 2 years of pandemic
Owning a store in a town known as Christmas City may give merchants in Bethlehem a slight advantage over other areas during the holiday shopping season. However, there is a bigger reason for optimism for downtown merchants despite economic issues facing consumers.
Neville Gardner, who owns Donegal Square and the Red Stag Pub and is chair of the Downtown Bethlehem Association, says his retail business has been strong lately and he thinks it will stay that way.
That has been reflected by the National Retail Federation’s holiday shopping forecast, which predicts “healthy” spending by consumers in the next couple of months, despite inflation.
“I kind of concur with them,” Gardner said, noting that his restaurant is understaffed. “Our retail business has been pretty strong. Our business is a little bit ahead of last year, kind of where we budgeted.”
Gardner said that Bethlehem’s status should be taken into consideration when discussing an uptick in holiday season business: “We’re maybe a little insulated, maybe we’re a little ahead of the norm.”
Rebecca Wang, a professor at Lehigh University’s College of Business, said shoppers are returning to stores after having to deal with the COVID-19 pandemic for almost two years. Local merchants should be among those feeling a surge in business.
“People are looking forward to experiencing the in-store festivities as they shop in person,” Wang said. “Local merchants should experience a revenue increase this year as people try to reconnect with their communities. Retailers are trying to take advantage of this sentiment, as well — notice that all the seasonal decorations have been going up months ahead. We got Halloween in August and holiday wreaths in October.
“This said, it does not mean that consumers are going to spend mindlessly,” she said. “Consumers are now more cognizant about what they are buying. In other words, consumers are buying, but they also want to stretch their dollars.”
Products with a strong brand image are going to fare better than unbranded items, Wang said. Retailers with competitive offerings or interesting niches are going to be more successful in attracting foot traffic and consumer spending.
Wang said that consumers are more than ready to spend this holiday season because of the stress they have been facing because of inflation and higher energy costs.
“While it might sound counterintuitive, one way to cope with stress is to shop,” Wang said, “and spending on the holidays, especially, is a satisfying, almost calming luxury that people feel like they can still afford right now. Plus, much of holiday spending is buying gifts for friends and families, and in times of stress, people want to feel connected.”
Wang said the Consumer Price Index has shown that the price of manufactured goods has come down slightly in the last few weeks. When combined with other holiday promotions and discount “holiday gifts are looking like a steal when compared to other type of expenditures.”
By the numbers
The NRF expects sales in November and December to grow 6%-8% over 2021, to $942.6 billion-$960.4 billion.
“While consumers are feeling the pressure of inflation and higher prices, and while there is continued stratification with consumer spending and behavior among households at different income levels, consumers remain resilient and continue to engage in commerce,” NRF President and CEO Matthew Shay said in a statement. “In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”
Still, it’s a smaller increase than last year, when spending was up 13.5% over 2020, to $889.3 billion. Over the last 10 years, sales have had an average increase of 4.9%, including during the pandemic.
NRF expects that online and other non-store sales, which are included in the total, to increase 10%-12%, to $262.8 billion -$267.6 billion. This figure is up from $238.9 billion last year, which saw extraordinary growth as consumers turned to online shopping to meet their holiday needs during the pandemic. While e-commerce will remain important, households are also expected to shift back to in-store shopping and a more traditional holiday shopping experience.
“This holiday season cycle is anything but typical,” NRF Chief Economist Jack Kleinhenz said. “NRF’s holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity. Despite record levels of inflation, rising interest rates and low levels of confidence, consumers have been steadfast in their spending and remain in the driver’s seat.”
Donegal Square’s Gardner has had a front-row seat for that activity.
“We’ve already been seeing that throughout the year,” Gardner said.