"Recession fears are mounting, but consumers aren't running away from small businesses."

Inflation has been the main story of 2022, and for good reason — it continues to have a major impact on both businesses and consumers. October’s consumer price index shows core inflation has hit a 40-year high, and it’s making everything from fuel to food costs soar.

Now, whispers of a possible recession have started to grow louder, and small businesses are feeling nervous about what it might mean for their operations.

• The top concern for small businesses about a potential recession is having to increase prices. Other concerns include not being able to give/get pay increases and having to work more/longer hours.
• Over half of small businesses we polled fear the continued effects of inflation will impact consumer spending into 2023.
• 40 percent of small businesses are struggling to attract new employees, and 21 percent are concerned about retaining current staff members.
  
  

As it turns out, it’s right to think people would be price sensitive during a recession.

When we polled consumers, 85 percent told us they would likely pull back on spending, with more than half cutting “convenience”, “lifestyle” and “entertainment” purchases first. Small businesses in those categories might want to insulate themselves by starting to plan for a potential recession right away.

However, despite the impact inflation is having on both small businesses and consumers, optimism still shines through. Consumers may be recalibrating their spending, but not necessarily at the expense of small businesses.

• More than one-third of consumers would try to support SMBs more often during a recession, and 29 percent are willing to pay a little more to do it.
• 84 percent of small businesses didn’t express concern about surviving a recession, and 90 percent are confident they will still be in business a year from now.
  
  

The big takeaway here is that a recession doesn’t have to be the end of the world for small businesses. Yes, they may have to raise prices, but that alone won’t drive consumers away — many will still go out of their way to support the businesses that power their communities and demonstrate their value.

"Americans are holiday shopping early this year, but small businesses haven’t accelerated their preparations to match."

The holiday season is a critical time of year for small businesses and nonprofits, and it’s crept forward in recent years. This season, October looks to be an inflection point for both small businesses and consumers.

• 36 percent of Americans began their holiday shopping before October 1st
• Outside of inflation, the top three reasons consumers plan to shop early all relate to concerns about shipping.
• 52 percent of small businesses said they don’t start holiday planning until October at the earliest — and 1 in 10 plan to wait until December.
• Just 16 percent of small businesses said they are ordering holiday inventory early, and only 15 percent plan to increase their marketing/ad spend.
  
  

This gap should be eye-opening for small businesses.

By waiting until October to begin holiday planning, they are potentially missing out on current customers who are ready to buy and new customers who might be looking for them. 

In addition to shopping earlier, 40 percent of consumers told us they plan to spend less on holiday gifts this year than they did in 2021, due to inflation. However, there is still plenty of holiday cheer out there when it comes to supporting small businesses.

• 35 percent of holiday shoppers told us they feel it’s important to buy locally this holiday season, and another 44 percent plan to donate funds or volunteer their time to nonprofits.
• Nearly half (48 percent) of those who plan to avoid box stores and major online retailers choose to do so because it’s important to them to support small businesses.
• Similarly, 39 percent feel they can get more unique gifts from small businesses, and 34 percent of those who plan to avoid big box stores and major online retailers feel small businesses offer a more enjoyable shopping experience.
  
  

It’s clear from our findings that the holiday season will be impacted by rising inflation and other fears. Small businesses need to recognize that shoppers have shifted the season forward and take action now to engage with them before the bulk of holiday shopping begins in November. 

Email marketing is a great way to reach new and existing customers and show them what you have to offer this holiday season. Adding coupons, discounts or other exclusive content can help boost engagement and give shoppers a reason to buy, even as they are tightening their wallets.

READ THE FULL ARTICLE HERE.

Written by: Michael Wood
Sourced: Constant Contact Partner