Posted by: John Tozzi on November 6, 2009
The eight weeks between today and the year’s end could make a big difference for the nation’s small retailers. Many shops do a high percentage of their business in the months of November and December — as much as 25% or 30% for jewelers, electronics stores, and department stores, and likely even more for certain specialty shops. Robust holiday sales could salvage an otherwise dismal year.
“Clearly the best gains we’re going to see this year are going to come at the end of the year,” says Frank Badillo, senior economist at Retail Forward. “They could make up for a lot of pain and suffering from the early part of the year.” Panicked consumers cut their holiday spending last year by 4.5% in the months following the financial crisis in 2008, according to the group.
This year’s predictions are out, and most forecasters expect a slight rise from last year’s dismal figures. But small retailers that compete with big box stores and online discounters may see sales drop even if shoppers spend more overall. Though the economy has showed signs of growth, unemployment just topped 10.2%. The rising number of people jobless, underemployed, and those worried about the future will likely hold back spending.
Last month we asked for your help covering this story to get dispatches from the retail front lines. Today I’m pleased to introduce three companies we’ll follow over the next two months –- all small, independent retailers. These companies will share what they’re seeing and hearing from customers, whether their sales are up or down, and what strategies or promotions are working. We hope their insight will help your company this season. Here they are:
Mathias Eichler, 32, runs Einmaileins, a European import shop in Olympia, Wash. he started in 2007. The store, located in the city’s downtown, sells “modern European lifestyle products” including kitchen and home items, books, and food. Eichler, who runs the shop with his wife but has no other employees, has averaged between $8,000 and $12,000 in monthly sales this year but hopes to more than triple that in December. He tries to draw customers into his shop with events like a First Friday gallery walk. “We’d rather compete with customer service and atmosphere, where big box stores can’t compete,” Eichler says. He also relies heavily on email marketing, Facebook, and Twitter to reach out to customers and promote his store.
Aunt Sally’s Praline Shops
New Orleans, La.
Aunt Sally’s is a third-generation family business that makes the famous pecan candies in New Orleans’ French Quarter. The 38-employee company has a wholesale business, a retail shop that’s a staple on tourist itineraries, and an online mail-order business that usually makes up the bulk of sales during the holidays. Frank Simoncioni became CEO in 2005, four months before Hurricane Katrina devastated the city, and he says it has been a rebuilding process ever since. Though things were beginning to look better in the middle of 2008, further hurricanes in the fall followed by the financial crisis set the company back again. “That Christmas turned out to be really sour,” Simoncioni says. “It was the first year we took a major hit in the Web business.” He says tourism has never returned to pre-Katrina levels. Aunt Sally’s sales were down this year through September, and Simoncioni isn’t sure what to expect for the holidays. “We thought that the economy is pulling out of this recession, but the actual signs are not showing it.”
Overstock Art sells hand-painted replicas of famous paintings online. Founder David Sasson, 40, has 14 employees in the United States and China, where the paintings are produced by local artists. The 7-year-old company mostly sells to consumers and small businesses, like restaurants or doctors’ offices looking for wall décor. Most paintings are priced between $100 and $200, and many customers buy them as gifts during the holidays. Overstock Art, which has annual revenue of under $4 million, was growing throughout 2008 at a 25% clip over the previous year, though that pace dropped off to single digits in the fourth quarter. Sasson says business was more or less flat in 2009 until mid-July, when sales picked up swiftly. September was his best month ever except for last December.
We’ll check in with these three retailers throughout the holiday sales season. But we still want help from readers to get a sense of how small businesses across the country are faring this year. If you have a tale from your business you want to share, let us know. Or if you see a local shop with a creative promotion, surprising success story, or anything else worth noting, send us a note or a photo. Leave a comment, email me, or let us know on Twitter.