What does the holiday shopping season mean to your business?
Retail sales tax figures show just how much shopping happens during the holidays.
December sales taxes will boost the city’s general fund by about $200,000, says Brad Posenjak, Wenatchee’s finance director. Crunching the numbers backward shows shoppers in Wenatchee will spend about $23 million this December.
“There may be other factors besides holiday sales that create a boost of spending in December, but I think it’s safe to assume the majority is holiday related,” Posenjak said.
Historically, the city receives 10.1 percent of its annual sales tax revenues in December, compared to about 8 percent if it was averaged out. The extra 2 percent is what Posenjak attributes to holiday shopping.
His figures jive with percentages reported to Link Transit, which receives a share of sales tax revenues generated in Chelan and Douglas counties and eight cities — Wenatchee, Leavenworth, Entiat, Chelan, Cashmere, East Wenatchee, Rock island and Waterville.
“December is the big month,” said Nick Covey, Link’s finance manager. “In some years, it accounts for 10 percent. In 2015, it accounted for 13 percent, with no other months in the double digits.”
Wenatchee Mayor Frank Kuntz said all that local shopping activity is good for everyone in the city.
“The services the city provides to our citizens are very dependent on sales tax. With 40 percent of the city’s general fund budget dependent on sales tax, you can see that stressing those local purchases, all year around and particularly during the holidays helps to ensure that the good work you are seeing out on our streets is being done,” he said. “Frankly, even the number of police officers we are able to provide, is impacted by our buying choices.”
Kuntz notes the shop local discussion gets louder during the holidays, but it’s important all year long. “We want to see them supported all year around, not just during the holidays,” the mayor said. “With the advent of online options, the recognition of the importance of our local businesses and what they provide for our community needs to be stressed more now than ever before.”
Frosting on cake
Local business owners say they’re not necessarily counting on that end-of-year boost to turn red ink to black, but it certainly doesn’t hurt.
Collins Fashions owner Marcy Collins calls it the “frosting on your cake.” (See related story)
Firehouse Pet Shop and Grooming owners Allen and Jennifer Larsen agree.
They opened their shop at 17 S. Wenatchee Ave., Wenatchee, in 2015, but between them, they have more than 55 years of retail experience.
“We don’t see the holidays as a make or break time, since we strongly believe that a business model should be successful year round,” Allen Larsen said. “We have seen too many companies bank on the fourth quarter to survive.”
That said, things do pick up in November and December.
“We definitely see a spike in foot traffic and sales, and it is our busiest time of the year in several categories,” Allen Larsen said.
Holiday planning and execution are important, he said.
“You have to purchase the product months in advance with no return on that inventory,” he said. “Many businesses need the sales to be great to offset the additional inventory on your books.”
Timing is key, as well.
“You have to carefully plan when the product and holiday decorations hit the floor. The past few years have proven the need to get the goods out earlier and earlier, with 40 percent of consumers admitting to starting their holiday shopping starting the first week of October. The new rule of thumb is you better be set by the first week of November at the latest or you are behind the needs of the customer,” he said.
Part of a year-round effort
Jessica Russell, owner of Tumbleweed Bead Co., said, in some ways, she prepares for the holiday season all year.
“In January you look back at the season and make notes of what worked, what didn’t, were there any products that didn’t sell and identify products that really only sell during the holidays,” she said. “Then I start buying product as early as possible. Some vendors offer specials and discounts if you place your holiday order in January. And that can be the best time to think about what you need because it is all so fresh still.”
Her shop and studio at 105 Palouse St., Wenatchee, features her own jewelry designs and those of other artists, plus gifts, kitchen wares and more. She also has an active online shopping site and her designs are carried in 200 stores worldwide.
She tries to have the store holiday ready by mid-October, when people start looking for gift ideas. That can be a challenge because the holiday revenue doesn’t really start coming in until the end of November.
As for whether the holiday shopping season is icing on the cake or a deal breaker for the budget, she said, “It’s a bit of both. You have to be real careful in how you buy for the holiday and make sure you buy enough, and early enough but not blow your budget,” she said. “It is really tricky the first few seasons.”
It’s worth working out the kinks.
“The extra money you make over the holidays is great to help through the slower winter months,” she said. “If you are going to be successful you have to treat all year as important and inspire your customers through all of the seasons. So in that sense it really is icing on the cake.”
A community building experience
In addition to sales, the holiday experience, complete with lights, events and good cheer, builds community.
“We see a lot of families visit the downtown area, looking for that nostalgic holiday feel,” Larsen said.
Individual businesses getting into the spirit are part of the effort, as is the Wenatchee Downtown Association and the Wenatchee Valley Chamber of Commerce.
Both organizations “are really stepping up to light up the downtown with a festive feel,” Larsen said. “We think this will definitely add to the traffic in downtown shops.”
Russell said the WDA’s Holiday Open House and Wine Walk, scheduled on the second weekend in November, is a great example, good for the community and businesses.
“It brings a lot of people and shoppers downtown, ones that maybe wouldn’t normally come down. Even if they do not shop at wine walk, they often come back and do some holiday shopping,” she said.
Meredith Hilger, WDA program and event director, said the WDA looks for ways to help small businesses make the most of the season, including sponsoring events and promoting the local shopping theme.
“We at the WDA have an overarching mission to ‘strengthen and enrich the downtown experience.’ We do that through trying to be drivers of economic development, supporting the shop local message and mentality and putting on promotions/events to bring people downtown,” Hilger said.
One of those events is Small Business Saturday — the Saturday following Black Friday, following Thanksgiving Thursday.
“The beauty there is that it is really a day about supporting local businesses in the community,” Hilger said. “There is such a push for deals and discounts on Black Friday, but Small Business Saturday really is just about local pride.”
The WDA helps promote the event, registering through American Express, which started the shop local movement, and provides all marketing materials.
“We will distribute these through the downtown, and certainly some stores will do specials or giveaways that day. Mostly, it is just promoting that ‘shop small’ message, the day after everyone seems to be going out to those box stores for the mayhem of Black Friday.”