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Small Business Saturday: How This Year Will Be Different

Nov 24, 2020 by Maurie Backman
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Thanksgiving weekend is commonly hailed as the biggest shopping weekend of the year, but it's not just big-name retailers that anticipate the uptick in revenue. Small businesses also count on the holiday surge to boost revenue and cover their many operating expenses. And with Small Business Saturday coming up on Nov. 28, it's clear that local establishments across the country are crossing their fingers and hoping for a busy shopping day. But this year, Small Business Saturday is apt to look a lot different -- unfortunately, not in a good way.

Will customers come out to support small businesses this year?

Sandwiched between Black Friday and Cyber Monday, Small Business Saturday is a bit of a hard sell to begin with. Consumers who overspend on Black Friday may be hesitant to hit the stores one day later, and those anticipating Cyber Monday deals may choose to save funds until then.

Still, year after year, customers do support local stores on Small Business Saturday. Since the day was established back in 2010, consumers have spent a collective $120 billion on it. But this year, small businesses are going to face a lot of challenges at a time when they'd normally enjoy an uptick in customer support.

For one thing, many small businesses will be operating with capacity limits and other restrictions, making it difficult to accommodate a larger number of shoppers. Small businesses may also be grappling with staffing challenges during the coronavirus pandemic. If an employee in a large chain is exposed to COVID-19 and has to quarantine, replacing that person for a weekend shift isn't a huge ask. But if a small business employee is forced to lock down at home, that person may be one of only four or five workers on staff.

Furthermore, a lot of consumers are purposely shifting to online shopping this year to stay safe in the midst of the pandemic. But many small businesses aren't set up for online ordering, and a lot of those that are may not have a particularly well-oiled system in place.

An inability to quickly ship orders could hurt small businesses. Customers who shop the Saturday after Thanksgiving will likely be focused on securing holiday gifts, and if there's any doubt about how long it will take to fulfill orders, they'll likely take their business over to a retailer like Amazon (NASDAQ: AMZN) that's practically turned shipping into an art form.

And while small businesses may offer superior customer service to their larger counterparts, from a pricing perspective, they often lag. Large businesses can negotiate deals with manufacturers that allow them to source products at a lower cost and pass those discounts on to consumers. Small businesses don't have the same connections and resources, so it's often impossible for them to be competitive on price. But given the greater economic crisis at play, consumers may be shopping on more of a budget this year, leaving small businesses with higher price points out in the cold.

Of course, this doesn't mean Small Business Saturday will be a glaring failure. But local establishments should brace for the possibility that this year, they may not see the same revenue they did in years' past. For better or worse, larger chains will likely land in the same boat during the holidays, but while many of them have the capital and resources to ride out a sluggish season, many small businesses don't.

Now that the presidential election is over and lawmakers can refocus on a stimulus package, small businesses may soon be in line for additional aid. And if Small Business Saturday ends up being a bust, a lot of them will need that help as soon as possible.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.