Despite some initial reports that consumer spending is up this holiday season, small business owners are being left out in the cold, according to a new survey of retail small business owners from Goldman Sachs 10,000 Small Businesses Voices. Seventy-seven percent of small business owners said they aren’t seeing an increase in holiday sales this season and 55% say their profit margins are down this year – a troubling sign during a make-or-break shopping season. 

While Federal Reserve data shows inflation slowing, the pressures continue hurting small business owners. On a personal level, 70% of small business owners said the state of the economy and their financial outlook was negatively impacting their own household’s purchasing power and personal spending plans for their families this holiday season. Eighty-two percent of small business owners said they have been forced to raise prices in the past year, and 66% said they’re finding it difficult to absorb inflationary pressures and keep prices low.

“The holiday shopping season is a critical time for any retailer, but, unfortunately, small businesses are not seeing the kind of increase in consumer spending that will give us a big sales boost to close out the year,” said Alexzandra Denis, owner of Avalah in Brooklyn, NY.  “The result of these difficult times for small businesses means not only are our business’ bottom line hurting, but our personal holiday spending budgets are taking a hit, too.”

A variety of reasons were offered by small business owners as reasons why their profit margins and sales numbers aren’t as robust this year. When asked what they attribute the slowdown to, 67% said consumers seemed to have less disposable income and 67% said the economy is tougher in 2023. Thirty-two percent said they were unable to compete with discounts offered by larger companies, and another 31% said more consumers were shopping online, making it harder to reach them. 

While there wasn’t consensus on what the result of slowing sales and diminished margins will be, the potential outcomes were all difficult: 22% said they would have to delay reinvestment in their business, 21% said they would have to lay off workers or curtail hiring plans, 13% would need to seek a loan or line of credit to make up the difference, and 12% said they would be forced to take a personal pay cut.

The survey of 337 retail small business owners was conducted December 1-8, 2023.