Navigating a Budget-Conscious Holiday: Las Vegas Businesses Gear Up for the Season
As the holiday season approaches against a backdrop of economic shifts, businesses across Las Vegas are bracing for a season of cautious spending amid hopes for a boost in sales. Despite a year marked by rising interest rates and a downward trend in inflation, the festive spirit remains alive among retailers, albeit with a tempered optimism.
Santa’s Wrap Readies for the Festive Rush
At Santa’s Wrap, an expansive 18,000-square-foot home decor emporium, the shelves have been adorned with Christmas merchandise since April, according to Beth Tom, co-owner of the establishment. Tom acknowledges the challenges faced by the business this year, noting a decline in foot traffic. However, with the holiday season on the horizon, she remains hopeful for a much-needed upswing in sales.
“We’re still very optimistic about the season coming up,” Tom affirmed. “We’re hoping that people come out and want to shop… We definitely see an apprehension in people.”
Economic Outlook and Spending Sentiments
Echoing this sentiment, Andrew Woods, director of the Center for Business and Economic Research at UNLV, suggests that while shopping activity is anticipated throughout Nevada, an extraordinary surge in spending isn’t expected.
“I certainly don’t think the Grinch is going to steal Christmas… but Santa is going to be a lot more budget conscious,” Woods commented.
The Shift: ‘Looking Not Spending’
This year, a shift in consumer behavior towards restrained spending is evident, notes Lauren Tieru, owner of Paige and Rye, a retailer specializing in decor and clothing products. Tieru observes a trend where individuals are increasingly inclined to admire without purchasing.
“I feel like a lot of people are out and about at markets and pop ups, but they’re looking and not spending,” Tieru observed. “It used to kind of be like, ‘Oh, I want that, it’s that cute.’ Now it’s just like ‘I want it but I really don’t need it.’ I hear that a lot more right now.”
Forecasting Holiday Spending
Despite this apprehension, a moderate increase in retail sales during the upcoming holiday season is anticipated. The National Retail Federation predicts a 3–4 percent rise in holiday spending compared to last year, projecting figures between $957.3 billion and $966.6 billion. This projection falls short of the 5.4 percent surge witnessed in 2022.
Factors Influencing Spending Habits
This tempered approach to holiday spending is attributed to several economic factors, including record-high credit card debt and prevailing levels of inflation. The Federal Reserve Bank of New York reported credit card debt reaching a record $1.08 billion in the third quarter of 2023, while the latest inflation data in October indicated an overall inflation rate of 3.2 percent.
Impact of Discounts on Consumer Behavior
Despite consumer reluctance, discounts and sales are emerging as key drivers of holiday spending. Christina Wilson from Zia Records and Ernesto Sesma from the Grocery Outlet Bargain Market both emphasize the influence of discounts in attracting customers. Wilson mentions the positive impact of Black Friday sales, while Sesma highlights the success of special offers, particularly in the grocery sector.
The ‘Substitution Effect’ and Changing Shopping Patterns
Economists like Woods refer to this phenomenon as the “substitution effect,” wherein consumers gravitate towards discounted goods and adopt a more cost-conscious approach to shopping. Sesma notes a visible shift in consumer behavior towards seeking affordability, bypassing higher-priced options offered by bigger stores.
Challenges for Small Businesses
However, for smaller local businesses like Paige and Rye, matching the competitive prices of larger chains or online giants remains a concern. Tieru hopes that consumers consider not only prices but also the impact of supporting local businesses, emphasizing the importance of these purchases for smaller establishments.
“Shopping at local businesses has a bigger impact than shopping at big chains or retailers,” Tieru stressed.
As Las Vegas gears up for the holiday season, the landscape reflects a delicate balance between consumer caution and the enticing pull of discounts, shaping the contours of this year’s festive spending spree.