Small business owners fear shutdown’s aftershocks will hurt holiday sales


Many small business owners are concerned shoppers will spend less this holiday season that they did in 2012. (Lynne Sladky/AP)
October 29, 2013

Nearly two weeks after the government reopened, small-business owners are still bracing for economic aftershocks of the shutdown, according to a new survey, and many believe the reverberations may carry well into the holiday shopping season.

In the immediate aftermath of the 17-day shutdown, just 13 percent of small-business owners polled on Oct. 18 said they were more optimistic about sales this season, while 43 percent said they expected sales to drop during the holidays. Meanwhile, half specifically said they expect the fallout from the government shutdown will prompt shoppers to spend less than they would have to close out the year.

The results stood in sharp contrast to a poll taken late last month, before the shutdown began. At the time, it found 30 percent of small-business owners said they were more optimistic heading into this year’s holiday sales than last year, compared to 21 percent who expected sales to be down this year. Manta, an online community of small firms from around the United States, conducted both surveys of roughly 1,000 business owners.

“Though the government has reopened, it’s created economic uncertainty across the nation and has affected consumer confidence impacting retailers of all sizes,” Kristy Campbell, Manta’s director of marketing and communications, wrote in an email.

Any pullback on consumer spending could be particularly problematic this year, as the calendar already is not working in retailers’ favor. This year offers the the shortest holiday season since 2002 (only 26 days this year between Thanksgiving and Christmas), including only four weekends, compared to five each of the last several years.

About one in 10 survey respondents said they plan to start their promotions or discounts earlier this year to account for the short season, while the same number said they plan to up their social media marketing efforts this year to get shoppers in the door.

It comes on the heels of several reports that holiday shoppers are likely to spend a little less this year, partly a result of shaken economic confidence in light of the shutdown. The University of Michigan, for instance, reported last week that its consumer confidence index fell to 73.2 from 77.5 in September.

It was the third straight month of decline since a peak this summer, and last month, respondents made the most negative references to the government’s impact on the economy in the 50-year history of the survey.

Meanwhile, the National Retail Federation has predicted that holiday sales will increase this year, but only slightly. The group posted a forecast of $602.1 billion for November and December retail sales, up about 3.9 percent over the same period last year.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.
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