Consumers plan 25% more holiday spending, increasing small business revenue

As the holidays approach, small business owners are on the cusp of significant revenue opportunities. According to the recently released Intuit QuickBooks Holiday Shopping ReportUS consumers are expected to spend $263 billion this holiday season, marking a remarkable 25% increase over the previous year. This increased spending presents a $109 billion opportunity for small businesses as consumers increasingly favor local stores, with 41% of their holiday spending going toward small business purchases.

In this annual survey of 6,000 consumers and 1,000 small business owners, conducted by Intuit, participants said the desire to give gifts to loved ones overshadows concerns about economic pressures such as tariffs and inflation. Nearly half of consumers surveyed said they would be willing to cut back on other expenses – like eating out and even essentials like groceries – to ensure they can give gifts to their family and friends. This year’s festive spirit is essentially about prioritizing joy over economic concerns, with 42% of respondents saying gift giving is more important than ever.

This optimistic sentiment among consumers plays a crucial role for small businesses that often rely on the holiday rush for a significant portion of their annual revenue. In fact, 93% of small business owners said the holidays are crucial to their overall success. Many expect holiday sales to make up nearly half of their annual revenue, up from 33% the previous year. Additionally, 65% of owners expect an increase in revenue compared to last year, supported by the overall confidence of 89% of small business owners surveyed that customers will spend enough to meet revenue goals.

Liz Pham, owner of Bows Arts, emphasizes this sentiment, saying, “For small businesses like ours, the holidays are the time when everything comes together. Not only is it the busiest time of year, it’s also the time when we most see the impact of our community’s support.” Pham emphasizes that tools like QuickBooks and Mailchimp help streamline operations, allowing her to stay focused on creating exceptional customer experiences.

Although the outlook is positive, this holiday season is not without challenges. Economic factors still play a major role. For example, 86% of consumers expressed concern about tariffs and inflation impacting their holiday shopping behavior, while more than half expect to see higher prices. Small business owners share similar concerns; 68% acknowledged that tariffs have had a significant impact on their operations. In response, many small businesses have adjusted their strategies: 32% have increased their prices, while 44% plan to offer special deals to attract customers.

Simon Worsfold, Head of Data Communications at Intuit QuickBooks, emphasizes the need for small businesses to take strategic approaches in a precarious economic environment. “With nearly half of U.S. consumers prioritizing shopping small this season, small business owners can take advantage of this in the coming months by leveraging digital and AI-powered tools,” he notes. These tools can assist with marketing efforts, inventory management, and operational efficiency.

To navigate this bustling shopping capital, small business owners can consider implementing several actionable strategies:

1. Embrace AI tools: The survey shows interest in AI is on the rise, with nearly three-quarters of small business owners planning to use AI technologies this holiday season. Tools that automate tasks such as inventory management and customer contact can save time and money.
2. Optimize for mobile and in-store sales: Although online shopping dominates, especially on mobile platforms, more than half of consumers also plan to shop in physical stores. An omnichannel approach helps meet consumers’ diverse shopping preferences.
3. Effective marketing communications: More than half of respondents cited coupon codes as their primary incentive for purchases. Small businesses are encouraged to employ personalized marketing strategies via email and SMS to notify customers of special offers.
4. Focus on early holiday shopping: Since many shoppers start buying gifts as early as October, it’s essential for small businesses to keep track of inventory and tailor their marketing efforts to peak shopping times.

The report outlines a clear path for small businesses to thrive this holiday season, leveraging both digital tools and consumer trends that prioritize support for local businesses. By staying flexible and resourceful, small business owners can significantly increase their holiday sales and ensure a prosperous end to the year.

For more information about this report, visit Intuit’s original post at Investor Relations.

Image via Envato