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Shopping Trends Bring Hope for Small Retailers, Too!

This time of year, retailers hear more holiday sales prognostications than they do syrupy versions of "Little Drummer Boy." But while it's often helpful to get a sense of how and why shoppers are opening their wallets, small retailers typically don't benefit much from those studies -- pretty much all of them focus on the big chain retailers and mega-sites.

To fix that, I asked Alison Paul, vice chairman and retail sector leader for Deloitte LLC to talk to AllBusiness.com specifically about how this season's retail trends affect small, independent retailers. (In the spirit of full disclosure: Yes, she's also my sister-in-law.)

A Rising Tide
First off, Deloitte's 25th annual holiday survey of consumer spending intentions and trends was more positive overall than it had been the last couple of years. According to the survey 66 percent of respondents said their financial situation is better or at least unchanged, and 62 percent planned to spend more on holiday shopping. More to the point, though, there are specific trends that bode well for smaller businesses.

"I'm going to go out on a limb here -- we are inferring some of the data -- but what consumers told us makes me think it's a brighter picture for independent businesses" as well as the chain stores, Paul said.

Taking Price Out of the Equation
"Consumers are focusing far less on price this year than the last couple years," Paul added, noting that toy stores are the number three store category this year, recovering somewhat compared to discount stores in the rankings in previous years. "We saw that in both back to school and holiday surveys." Luxury retailers are having a great season as well, Paul said, and that's another area where smaller outfits can compete more effectively than in the discount sector.

"People are now buying what [they] really want, as opposed to just on price, and that translates into good news for independent stores," Paul stated. At the same time, she added, many shoppers are feeling flush enough to buy themselves gifts as well as for others. It's a welcome return of the age-old "one for you and one for me" mentality that was absent the last few years -- and that creates opportunities for retailers of all sizes.

Gift Cards Can Be a Double-Edged Sword
Ironically, the ever-increasing trend toward gift cards could also benefit smaller, more individual stores, Paul said. Consumers told Deloitte that gift cards are most popular gift choice (56 percent), she said, but they also complained that gift cards are impersonal. While small businesses can't match the reach of a national chain, buying a gift card from a smaller, independent shop, Paul explained, "automatically makes it more personal...it shows thoughtfulness in a way that a chain store gift card wouldn't."

It's not all good news, of course. Paul pointed out that small retailers are not only competing against the big box stores, they're also fighting tooth and nail against the giant, pure-play online stores. Almost three quarters (72 percent) of their customers say online research will influence their holiday decisions, and 12 percent (25 percent among 18-29 year olds) said they were going to use social networking this year as part of their shopping process.

At the same time, though, the Web and social media hold opportunities for smaller stores, as well. "I imagine more and more small business are building a Website or other online presence," Paul said.

Remember Why You Exist
The important thing, Paul suggested, is to "remember there's a reason why you exist," whether its your store's cachet, its ambiance, selection, or service, and to leverage that. Combine those strengths with affordable new business-enabling technologies, and "there's an opportunity to capture some of the holiday spend."

Social media, especially, can really even out the playing field for smaller retailers, Paul said, or even tip it in their favor. "People are more passionate about small businesses, and that translates into social networking" power, she said. Social networking doesn't require much of a marketing budget, but it can have a big payoff."

It's not free, Paul acknowledged, but "it's not like they have to buy network TV... which isn't working anyway."

Finally, Paul lauded the attention being paid to small business this season, including promotions like American Express' Small Business Saturday. Whether or not it acutally lifted small business sales, Paul said, "we all know about it, so the awareness is out there.

"I think it's a great idea and the timing couldn't be better. The optimism is there."