Retailers Share Strategies, Challenges During Holidays

It is common for retailers to only reach profitability during the fourth quarter of each year, yet small businesses are the lifeblood of local economies. Through an annual Shop Small Impact Study, leading financial services provider American Express found that 68 cents of every dollar spent in a small business is recirculated in the local community. That becomes wages for local employees, sales tax or donations to nonprofit organizations aiming to improve communities.

A number of factors, including long-tail supply chain issues, early product-buying markets and more transitory economic conditions, make the holiday season a crucial time for small retail businesses.

"I think anytime that we don't know exactly what's happening in the government or with the economy, it's natural for everyone to sort of withdraw, realign their spending," said Katrin Franklin, who owns Bump and Baby in Pinehurst and is president of the Pinehurst Business Partners.

This year, rising inflation and the longest government shutdown in our nation's history resulting in a slowdown of sales in October saw local business owners apprehensive heading into the season.

"I think people were hesitant to start shopping for Christmas yet because they didn't know if they were going to have a paycheck coming or benefits or they would prefer they take that money and put it somewhere else, whether it's a savings account or to help fill community fridges," said Ashley Tramontin, owner of Against the Grain and vice president of the Southern Pines Business Association. "I think it reflected in retail in October, and I think we're seeing it come back in November, which is positive, but it's really hard to recoup lost time.

"When you're a small business in a small town that puts all of its effort and its year into the third, fourth quarter of your sales, that's ground that has to be made up still — and that's difficult to do."

With shifting shopping habits over recent years, retailers have had to adjust inventory and marketing tactics to make an impact.

"I feel like for us, maybe the difference this year is we've been more intentional and measured about things that we've done — marketing and our buying habits, our staffing, things like that," said Betsy Saye, co-owner of Eloise Trading Co. in Aberdeen. "Because of the climate that we're in, the uncertainty, and that we had one chance to shoot it right for fourth quarter, we've worked really hard to get our best practices and events and other things in line, so we don't miss the opportunity."

Saye and co-owner Melissa Hamilton have spent years fine-tuning their curation of holiday items, indicating feedback that this year is garnering strong engagement.

"We also focused on really doing some events for our tried and true customers," said Hamilton. "We've, in the last four weeks, six weeks, reached out to our known customer base very purposefully, pointedly to get them to come in."

Part of that effort has been the events, hosted in partnership with nonprofits, to which they donate a portion of sales, along a sliding scale, based on total revenue for each event. Hamilton added that the use of new AI-based tools has streamlined analysis of data surrounding a marketing newsletter.

" The foot traffic has been good," said Saye. "I would say we aren't converting as many people from that foot traffic as we would like to, but it's also more random."

"We have a huge parking problem down here," added Hamilton. "I think it would be better if we didn't have a huge parking problem — people just leave. They tell us."

Tramontin echoed Saye and Hamilton, saying a larger majority of customers are spending less with each purchase. She said that small producers are seeing rising costs, driving higher prices for her customers.

"People assume that because I sell North Carolina-made goods, the tariffs don't affect us," Tramontin said. "That's incorrect, whether it's locally-roasted coffee, that coffee is not grown in North Carolina, whether it's glass for the stained-glass. The United States has had a major drop in glass production post COVID, so much of it comes from overseas — which is unfortunate, but it's the truth of it. Whether it's packaging, whether it's materials to make, whether it's paint, those things are all increased in price and therefore (the makers) have to increase their prices, too."

Additionally, she said indirect costs through what's known as "umbrella pricing" are cascading down the supply chain.

"They also make something that requires a good from overseas and that's coming in at a 177 percent tariff tacked on top of it," Tramontin said. "So instead of forcing their customers that purchase this one item to suffer, they've spread it out to cushion the blow, so you're still seeing it on the Made in America items. Even though they're made in America 'not affected' by the tariffs, those companies don't want to put 177 percent on one column of customers. Instead they choose to spread it out equally."

In Southern Pines, Kimberly Daniels Taws from the Country Bookshop said she is also experiencing fewer visitors.

"Our walk-in traffic is down, and we're finding that the amount of money people spend when they do make a purchase is also down," she said. "But people are shopping. The energy is high, and the enthusiasm people have for the holiday season is present."

In an effort to capitalize on that, she implemented new hours this season, remaining open until 8 p.m. on Thursdays in November and December, as well as planning to stay open late the day before Christmas Eve.

"We know that people want to shop with us," said Taws, "so we're trying to make it as easy as possible for people to get down here."

She said that sales were up for what she considers the start of the holiday shopping season, the first weekend after Thanksgiving, coinciding with Small Business Saturday. However, they stalled in the first week of December.

The Pinehurst Business Partners took advantage of the tree lighting, already scheduled by the Village. The organization encouraged shops in the village to stay open late for a holiday open house event in conjunction with the tree lighting.

"I've been met with a lot of really great, both elected people and also employees that are like, 'Yeah, let's do this together,' so we feel really included, really cared for," said Franklin. "We have a lot of meetings with them about the events they do independent of us, and how that impacts us, but then also events that we do with them in tandem that obviously are great. So moving into the holiday season, I feel very positive about that and the impact it has for small businesses because I feel like the consumer sees sort of a streamlined effort."

This is the first full holiday season with both Target and BJs open in the Morganton Park South shopping center, and Franklin said the large big-box stores have impacted traffic "in a clear way." While acknowledging that those stores meet a need in the growing community, she said the relationship between consumer and small business fulfills a different need.

"I think small business shopping has always had to be intentional," Franklin said. "There has always been competition for the dollar. Even before Target and BJ's, there was Amazon, so I can't blame any one 'big box,' right? Because we've always had competition for the dollar, and I feel like the consumer will always weigh price and convenience and emotional evaluation.

"Those three things together become the ticket of when people shop you and why. That's where a collaborative effort is really important because things need to be accessible, convenient. Parking needs to make sense. Store hours need to make sense. Events — there need to be enough dynamic events to attract the attention of the consumer and create special things like the tree lighting and holiday open house. You need reasons to want to celebrate and have that emotional connection."

Franklin said that interpersonal connection is a crucial factor in small-business patronage, something that can't be replicated through online shopping, for instance, that weighs into the "emotional value" people consider when shopping in local small businesses.

It's something that Southern Pines Business Association president and Marie and Marcele owner Crystal Eads-Brown said is an asset to her business.

"People are about the connection now more than anything," she said. "Customer service has to be top tier That's really what it comes down to. You know, I'm in this store five out of the six days we're open. I don't have a bunch of employees. I think that makes a difference."

She noted that her employees often relay that customers come in and say they would return when Eads-Brown or her mother April Nayman, who helps run the store, are working. She said that a mother had recently come in asking Eads-Brown's help to curate a comparable, locally sourced item to match something on a list from her daughter.

"Her daughter sent everything she wanted for Christmas off of Amazon, the whole list she made," Eads-Brown said. "We don't have the luxury of a kid being able to go to our site and make a wishlist."

She said consumer habits have partially shifted due to larger retailers offering Christmas items earlier in the year, and that small boutiques like hers have had to follow suit.

"I just think we have so many hoops we have to jump through now," she said. "Less and less, people are shopping small. Everybody is busy. Everybody's in a hurry — they love the convenience."

The recent opening of a "last mile" delivery facility in Southern Pines could shift the landscape further, but Franklin believes that much of that impact has already played out.

"Amazon says you can get it in two or three days but you really need it for tomorrow, so you don't do that because you're like, 'Well, Berney's Hardware has it today,' right," Franklin said. "So now the convenience lever has switched to where if I really need it today or I need it tomorrow for my kids' school project, I can't wait for Amazon. Will that change some of those shipping times and now can I get it tomorrow? There's bound to be a small number of times that makes an impact, but I don't think that's going to be the biggest needle-mover. I think the swing to that type of shopping has already happened. The distribution center being closer might be another 1 percent."

Convenience and accessibility lead to an influx in shoppers to larger stores, during and between the holidays, but that doesn't mean a sure correlation to increased revenues.

In its third-quarter earnings report, Target Corporation posted a 1.5 percent drop in overall sales. A reported increase in digital sales, both through online orders for its same-day delivery services and for non-merchandise items like memberships, shows that creative efforts to gain market share outlined by Moore County retailers are a reflection of consumer habits across the nation.

" I think we will always see that emotional connection for shopping local," Franklin said. "And it's not just 'shopping local.' It's really about supporting and loving and investing in your community. At this point, all the shop keeps really are your friends. So there, the emotional buy-in element that I think we see in Moore County — it's such a special area. Especially at the holiday season, I always have hope because this is also when we're buying for very special occasions, even if you're not a regular — monthly, let's say — shopper of one of your favorite local small businesses, I think you really are around the holidays because that adds an added value of something special to your gift."

" Shop local. Shop local. Shop local," Tramontin emphasized. "Seriously, even if it's — I feel that some people don't understand that even if you're at a big-box store in our town versus online, you're still stimulating the local economy. So it's so much better to get off your hiney and go and shop anywhere in your town, preferably a small business."

Contact Frank Daniels IV at (910) 693-2486 or [email protected]