Small Businesses Anticipate Better Holiday Season In 2012

As the holiday shopping season heats up, 43 percent of small businesses are more optimistic about holiday sales in 2012 than last year, according to a survey of more than a 1,000 small business owners cited in an article on the Fox Business website. The National Retail Federation also predicts a 4.1 percent increase in holiday sales over 2011, which supports the retailers’ sunny outlook.

While 51 percent of retailers expect a majority of in-store purchases, 41 percent anticipate selling more merchandise online than in the store. There is also some debate over which age demographic will spend the most money. Fifty-three percent consider millennials the bigger spenders, but approximately one-third contend Baby Boomers will break the bank this holiday season.

Do Predictions Mesh With Reality?

Holiday sales — those in November and December — are expected to total $586.1 billion, according to a statement released by the National Retail Federation (NRF) on Oct. 2, 2012. This is a 4.1 percent increase over last year. Citing signs of improving consumer confidence despite political and fiscal uncertainties, the predicted increase is higher than the NRF’s 10-year average sales increase of 3.5 percent.

“This is the most optimistic forecast NRF has released since the recession,” says NRF President and CEO Matthew Shay. “In spite of the uncertainties that exist in our economy and among consumers, we believe we’ll see solid holiday sales growth this year. Variables including the presidential election, confusion surrounding the ‘fiscal cliff’ and concern relating to future economic growth could all combine to affect consumers’ spending plans, but overall we are optimistic that retailers promotions will hit the right chord with holiday shoppers.”

Why Consumers Will Spend More

While the unemployment rate remains at 7.8 percent and there is only slight job and income growth, the NRF reveals encouraging signs like “increases in confidence and home prices” for a “cautious but capable consumer.”

“While moderate compared to what we experienced the last two holiday seasons, the forecast is a very pragmatic look at what to expect this year given the current rate of economic growth,” says NRF Chief Economist Jack Kleinhenz, Ph.D. “There’s still some general anxiety amongst consumers when it comes to how the state of the economy is impacting their spending plans, but retailers can expect to see excitement around their promotions and plenty of bargain hunters both online and in stores in the coming months.”

Actual holiday sales in 2011 grew 5.6 percent. This number is based on revisions from the U.S. Department of Commerce. The NRF has also revised its calculations to now include “non-store and auto parts and auto accessories stores.”

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