Michigan small retailers are feeling optimistic, uncertain about holiday shopping season

Posted by Admin November 29, 2024 Shopping

After a largely disappointing 2023 holiday shopping season, Michigan small business owners say they’re feeling uncertain about this upcoming season.

On the one hand, Michigan retailers say sales increased in October, giving them optimism for the holidays. On the other hand, a lot is working against them.

To start, the holiday shopping season for many consumers — which starts the day after Thanksgiving on Black Friday and goes through Christmas — is shorter this year, with Thanksgiving falling later in the month. Consumers are still feeling the impact of inflation. And small business owners are also competing against the discounts offered by big box retailers and the ease of online shopping.

“Do I think it’s going to be much different than last year? Probably not,” Eli Morrissey, the owner of The Rocket, with locations in Ypsilanti and Ferndale, said. He described last year’s season as “decent” and said much of the shopping at his store happened in the two weeks before Christmas, which he mostly attributes to consumers not trusting that what they order online will get delivered by Christmas and doing their shopping in person at that point instead.

Holiday sales at Michigan retailers were down around 5% last year compared with 2022, according to data provided by the Michigan Retailers Association. Retailers are feeling similarly about the next three-month sales outlook as they were last year, the association said, although the association’s Michigan Retail Index, a monthly gauge of key retail activity in the state, found October’s sales showed a positive trend for the first time since June 2023.

Consumers will spend, but where?

Consumer spending on gifts, food and decorations for the winter holidays this year is expected to reach a record $902 per person on average, according to the National Retail Federation’s latest consumer survey. That’s $25 per person higher compared with last year’s spending and $16 higher than the previous record set in 2019.

Meanwhile, a record 183 million people are planning to shop in-store and online from Thanksgiving Day through Cyber Monday this year (a period that includes Black Friday and Small Business Saturday), according to a recent National Retail Federation survey, up from the previous record of 182 million in 2023.

In Michigan, Black Friday was the highest sale volume day of Thanksgiving weekend last year, with Small Business Saturday coming in second, the Michigan Retailers Association said.

However, only 23% of adults in the U.S. say they plan to do their holiday shopping at small businesses, behind destinations such as online at 57%, department stores, grocery stores, discount stores and clothing stores, the National Retail Federation survey found.

These spending estimates come as Michigan has been facing some challenging economic conditions, such as persistent inflation, a climbing unemployment rate and declining real disposable income for workers.

Preference for online shopping isn’t going anywhere

Although it “doesn’t look like the bottom is falling out … the problem is that with smaller businesses, especially smaller retailers, who really do rely on people maybe going out of their way a bit — or shopping for value over price — softening economic conditions are going to hit them harder than they will online purchasing,” Brian Calley, president and CEO of the Small Business Association of Michigan, said in an interview. There are more than 900,000 small businesses in Michigan and SBAM represents more than 32,000 of them.

As online shopping continues to grow in popularity, some Michigan small retailers have created (or put more effort into) online businesses in hopes of meeting customers where they are.

Morrissey said The Rocket, which sells candy, toys and gifts, had an online presence prior to the pandemic but it wasn’t something he put a lot of time or investment into. During the pandemic, though, he said consumers discovered The Rocket’s website and it took off. Since then, online sales have continued to increase year over year. Morrisey calls The Rocket’s website his “third store.”

“People are just pressed for their time and they want to use their time differently,” Morrissey said. “Having to go out into stores and spend hours shopping, a lot of times is not what people are wanting to do anymore.”

Small retailers that have an online presence have continued to do really well and are growing, Calley said, but those tend to be retailers who have a strong brand and consumers are specifically seeking them out.

For others, though, the online marketplace is crowded, unequal and not very transparent, Calley said, at least for smaller retailers trying to navigate it.

“Sometimes people will oversimplify it and say, ‘Well, why don’t these smaller retailers just go online,’ ” Calley said. “It’s not like Main Street, where everybody has a fair shot.”

Offering events to get people to leave their homes

Smaller retailers are also now realizing that it’s not enough to have a brick-and-mortar storefront and hope shoppers see their sign and walk in the door.

“A lot of people these days can find things so many places that you have to give them an experience that makes them want to come to you,” said Leecia Barnes, membership experience coordinator at the Michigan Black Business Alliance, which has more than 1,700 members.

“So how are you going to make them want to actually come out of the house and shop with you if they can get it online?” she said in an interview.

DTown Vinyl, a craft store owned by Jessica Tidwell, who is a MBBA member, is offering something new this holiday season: Weekly crafting classes, such as a custom apron-making class, a paint-and-sip class and a class where participants make a custom coffee mug.

Tidwell was surprised to learn after opening the store in August 2020 that holidays were actually a slower time of the year for DTown Vinyl because she said she feels many consumers prefer going to a big box store to do their holiday shopping.

“We’re trying to evolve to outside of our craft community, where we can reach the everyday person that may not be as crafty, but still likes the idea of making their own items,” Tidwell said.

Since opening, Tidwell said the store has evolved from a craft store offering blank T-shirts, stickers and heat transfer vinyl, for example, to what she describes as a “full creative hub,” with business cards, flyers, wall decals, and canvasses to reach a wider customer base.

Growing the customer base through collaborations

Barnes also said she suggests to members that they should collaborate with other members and businesses, which combines both of their followings, creating a bigger group of potential customers.

Robin Wilson, the owner of Vesey Lane Goods in Detroit’s East Village neighborhood, said she’s collaborating with Blackbird Gallery to facilitate workshops to make Christmas tree ornaments and then following those workshops, Wilson is hosting a Christmas tree decorating event at her store for parents and children to come back and hang their ornament on the tree.

“Every time we have events like (these), people do shop with us,” said Wilson, who sells greeting cards, gifts and home decor. “They not only enjoy the experience that they have through the workshops but then they often will buy gifts for family members.”

Calley said he’s seeing local businesses really lean into the value proposition of quality over price, along with their community role, appealing to community members who are intentionally seeking out ways to keep their dollars local, especially during the busiest shopping season of the year.

“Somebody who has a physical presence is in many cases in a better position to make that argument, that they’re going to be there, going to stand behind (their product) and if something goes wrong, you’re going to have a real person to talk to,” Calley said.

Contact Adrienne Roberts: amroberts@freepress.com