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November 22, 2022

Large Retailers Aren’t Optimistic But SMB Brands Are Predicting a Profitable Holiday Season

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Jesse Kelber Headshot

Jesse Kelber

Sr. Writer, Flexport

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Jesse Kelber Headshot

Given the mixed messages you’ve probably seen recently about retailers being overstocked, unable to find enough warehouse space, and dealing with a labor shortage—it’s no surprise that many retailers have a dim outlook on this year’s holiday season. That said, chances are high that smaller retailers may have a pretty good peak season.

Capterra’s recent report, 2022 Holiday Retail Preparations Survey, shares why small and mid-size retail businesses (SMBs) are optimistic as they approach the year’s end.

Key Findings From the Holiday Retail Preparations Survey

While big retailers worry about holiday sales and inventory gluts, small and midsize businesses say they’re poised for success. Here are the three key statistics the report highlighted:

  • 63% of SMBs surveyed said they expect holiday profit growth, and 75% of them say they’ll have the inventory they need for a successful season.
  • 61% of retailers who intend to advertise during the holidays will increase their marketing spend on social media.
  • 45% will offer more holiday deals this year, with 40% of them saying they launched those deals as early as October this year.

Beyond those numbers, the report highlights two main trends:

  • SMBs are better positioned than ever to see a profitable holiday season.
  • Those brands that successfully navigate an omni-channel presence have the potential to come out on top.

SMBs Targeting Gen Z Expect a Strong Season

The latest cohort to come of age and enter the consumer marketplace is Generation Z, which has reached the age where they’re buying gifts for others. Ranging in age from 8-23 years, the oldest among Gen Z are out of college and starting their adult lives. While that means they have money to spend on gifts for family and friends, this generation is also conscious of issues like climate change and the economic challenges they’re up against. They’re also known to vote with their wallets by spending on brands that align with their values.

For SMBs who can effectively target Gen Z, 80% say they’re expecting higher seasonal profits this year, as compared to 63% for those targeting millennials and 54% for those targeting Gen X or Boomers.

That effective targeting needs to complement a company’s ability to actually ship the items being ordered. Since SMBs are smaller, they tend to also be more nimble and flexible around issues like sourcing. More than 45% of SMB respondents say they got an early start on holiday inventory this year and were well-positioned to fill incoming orders this year.

’Tis the Season for More Omnichannel Shopping

Hybrid retail shot into the public’s consciousness early in 2020 as businesses struggled to pivot and stay open in the wake of the burgeoning COVID pandemic. The idea of a small store also running an online storefront was relatively new to many people. As it turns out, those who were able to successfully navigate that pivot are now set up to continue thriving, with 68% of retailers with an omni-channel presence expecting to see their profits grow this year, versus 59% of e-commerce-only and 51% of brick and mortar-only retailers.

Interestingly, of these brands, 63% say they will be holding in-store promotions to help attract foot traffic to their physical locations.

Find Your Audience Where They Already Spend Time

More than 60% of SMBs advertising holiday specials said they plan to increase their social media spend. That includes 73% of brands targeting Gen Z/Alpha and 67% of those targeting millennials. To further prove that small businesses are better at pivoting to capitalize on the trends among their target audience, 60% of those leveraging social media say they’re shifting their focus from text-based content to short-form videos for the holiday season—mirroring the rise of TikTok, Reels, and other similar content networks.

Brands Are Offering Customers Multiple Ways To Save

Most retailers have always offered sales and special events in the run up to the holiday season. What’s changing this year is the expanded list of ways to save. Although most respondents say they’ll be prioritizing percentage discounts or coupons as in years past, roughly a third will be engaging their digital communities through exclusive deals for loyalty program members or social media followers. Additionally, seeing as how 55% of holiday shoppers are not willing to pay for shipping on holiday gifts, many SMB retailers will offer multiple shipping options to help cover all their bases.

Ensuring Success Beyond Peak Season

We may be on final approach to the 2022 holiday season, but there are things you can do today to help ensure your business's longevity far beyond the holiday season. With that goal in mind, here are our key takeaways:

Know your audience. Run surveys of your own, ask for feedback in the event of a return, offer your social media followers a special discount code if they answer some questions about what you’re doing right/wrong. Knowledge is power in retail, and the more you know about your customers, the better you can serve them.

Technology matters. End-to-end data visibility is a goal you’ve likely been reading a lot about recently. This means having access to real-time data on every step of your supply chain—from factory floor to your customer’s door—so you can make decisions even after your goods are en route. Invest in a logistics tech stack that enables you to make confident decisions and stay on top of keeping SKUs in stock and customers up-to-date on their order status.

Plan ahead and cover your contingencies. Diversifying suppliers is one important step in staying agile and keeping items in stock. But what about carrier options? Or mode shifts to avoid port congestion or a rail strike? Taking advantage of Less-than Container Load (LCL) programs like Flexport’s own Flow Direct and prudent use of priority air freight to ensure you stay in stock with those high-priority SKUs

Discover how unlocking end-to-end visibility, and implementing some key strategies and safeguards can help businesses of all sizes navigate fluctuating demand, delays and potential market changes to keep top SKUs in stock during peak season and beyond. To learn more, get our new Guide, “Beyond Peak Season – Tips for Navigating Ongoing Supply Chain Uncertainty.

About the Author

Jesse Kelber Headshot

Jesse Kelber

Sr. Writer, Flexport

Jesse is a Senior Writer at Flexport. He loves exploring the narrative where technology and humanity interact. When he’s not at the keyboard, you’ll find him wandering in the foothills of the Cascade Mountains.

Key Takeaways

1.

63% of SMB brands say they expect a profitable 2022 holiday season.

2.

61% of those who intend to advertise this year say they’re increasing their social media spend.

3.

45% say they’ll offer more holiday deals this year. A significant number started those deals as early as October.

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