NEW YORK (MainStreet) — By all accounts, consumers are full of the holiday spirit – if by “holiday spirit” we mean the desire to buy, buy, buy. Unfortunately, this year’s increased holiday spending seemed to be confined to the big retailers.
Retail sales in November were significantly higher than at the same time last year, and during Thanksgiving weekend in particular, consumer spending increased by $4 billion. Moreover, online sales hit record levels.
A recent report from comScore, though, found that online sales for the biggest 25 retail sites increased by an astounding 20% year over year during the month of November while staying largely stagnant for small- and midsize retailers.
"It’s a tough situation right now for many small businesses,” says Brad Wilson, a retail trends expert and founder of BradsDeals.com.
By and large, Wilson says, major retailers have been increasingly aggressive with sales and promotions this year to expand their business. Big chains such as Wal-Mart offered free shipping and price match guarantees during the peak of the shopping season, while others, including Kmart and Best Buy, extended Cyber Monday deals into a weeklong bonanza.
“In 2008 and 2009, the great deals offered by the major retailers basically came from desperation. Retailers were scared they had too much inventory and not enough consumer demand,” Wilson says. “But this year, the bigger retailers have mostly regained their health and are mainly discounting their items as a means to grow their business.”
While this may be great for consumers searching for bargains, it presents a potential obstacle for smaller stores who can’t offer such deep discounts and whose yearly profits may depend largely on healthy holiday sales.
“It’s really challenging,” says Rhonda Abrams, a small-business columnist for USA Today and president of the Planning Shop, a publishing company with resources for business owners. “Take free shipping as an example. It’s become something that shoppers are looking for and being offered constantly by big retailers, but small businesses just don’t have the profit margins to do that.”