It’s the most wonderful time of the year… to shop. This season consumer spending is expected to hit new highs, with the National Retail Federation forecasting holiday sales to exceed $1 trillion for the first time ever.
It’s also a crucial time for small businesses, many of which rely on holiday spending to keep their doors open throughout the year.
Small businesses enter holidays
Right now, small business owners say they’re grappling with heightened challenges including economic uncertainty, tariffs, and the rising costs of materials, all while dealing with narrow margins.
That economic uncertainty extends to consumers, 57 percent of whom anticipate a weaker economy in 2026, according to Deloitte’s annual Holiday Retail Survey. And 58 percent of consumers find holiday shopping to be stressful in general.
To streamline the process of finding the perfect gift, 33 percent of shoppers plan to use generative AI this holiday season for tasks like finding gifts and comparing prices — more than twice as much as last year.
Profit problems
“Most local artists and makers and small businesses make most of their profits during the fourth quarter,” said Ryan Doolittle, owner of local art collective Clover + Maven. “It’s something we hold on to all year.”
That trend is something some small business owners see as an opportunity to increase sales.
“Our business is built on people walking through the door,” said Ian Haisley, owner of Parker + Scott. “So, if they can discover us in another channel, that’s great for us.”
But as major retailers like Target, Walmart and Amazon roll out AI-powered shopping assistants for the holiday season, other small business owners see the technology as a challenge.
“We’re all so busy, you know, making our work and trying to sell it in the lanes that we’re familiar with,” said Doolittle.
Threats from AI
Doolittle says they’re not planning to make any investments in the technology, citing sustainability concerns as well as worries from 2D artists and creative writers about what it means for the future.
“I’ve been a glassmaker for 27 years,” said Doolittle. “AI is not going to take over my job, necessarily, but there are plenty of 2D artists here who I think are feeling that pinch a little bit more.”
For now, social media still reigns supreme. 59 percent of shoppers are planning to use social media platforms to pick out holiday gifts. And it’s a channel where many small businesses thrive in creating community and curating a personal buying experience.
“You know that the person who’s answering your question is in the store looking at the item answering your question, right? It’s not some bot that is just like spitting back out what it knows about product, A, B, C,” said Haisley.
Support local business
That personal touch is something small business owners say shoppers can count on when they come in this holiday season.
Shopping small also has a big impact on the local economy, with $68 of every $100 spent at a small business staying in the community, per data from Capital One. And small businesses like Clover + Maven, as well as Parker + Scott, source their products from other local businesses and Texas-based brands, keeping the cycle going.
“You’re supporting a business that’s based here in your neighborhood; the employees live here in Austin, and the makers in the shop come from the surrounding area,” said Haisley. “So it really makes a big difference, compared to some of the big box shops, where products are coming from all over, and you don’t really have the understanding of who you’re impacting.”
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