Half of U.S. consumers are willing to spend $10 more on an item to support a small or local business, but 77% are just as likely to shop in-person at a small business as large retailers
LOS ANGELES, CA (November 17, 2021) — Despite consumers prioritizing small business shopping to support their local communities in 2020, this year’s higher costs, limited supplies and challenging labor shortages are weighing more on shopping decisions this holiday season. According to new research by Union Bank, a leading West Coast bank, consumers are now just as likely to shop in-person at small businesses (77%) as large retailers (77%). However, roughly half of consumers are willing to spend up to $10 more on an item to support a small or local business, while about three in four plan to spend up to 50% of their budget with small businesses.
The Union Bank Small Business Holiday Spending 2021 Survey reveals hurdles consumers are facing this holiday season – avoiding crowds, navigating shipping delays and concerns over inventory shortages are reasons nearly half of consumers planning to shop earlier than normal this year (45%).
Overall, consumers are expecting a different type of holiday shopping season, with many saying they’ve begun experiencing some of the pain points - insufficient stocking of inventory (39%), reduced hours/staffing (35%) and long checkout lines (29%).
Furthermore, nearly a quarter say inflation is likely to – or already has – had an impact on their ability to spend on the holidays this year (24%). Other financial factors that will play a role in consumer holiday spending include trying to save more (22%) and increased expenses this year (21%).
To remain competitive, small businesses can offer a differentiated experience to encourage consumers to shop locally. More specifically, when asked what would make them more likely to spend at a small business this season, U.S. consumers cited the following drivers as most important:
And while 64% said offering holiday sales, discounts and promotions would make them more likely to spend at a small business, only 47% of small business owners plan to offer such price breaks. Similarly, 46% of consumers said providing a cheery holiday experience/ambiance would make them more likely to spend at small businesses, and only 32% of small business owners said they plan to incorporate decorations this holiday season. Finally, 49% of consumers said free local delivery would be a reason to shop small, while only 28% of small business owners plan to offer the service.
“Now more than ever, small business owners need to be creative and consider prioritizing low-cost, easy strategies to help motivate consumers to shop with them this holiday season,” said Todd Hollander, Head of Business Banking and Small Business for Union Bank. “Fortunately, it’s not too late – something as simple as creating a spirited ambiance with holiday décor and music, or offering free local delivery, could go a long way in motivating customers to choose a small business over a major retailer.”
Additionally, to prepare for the holiday season, small businesses can better promote themselves, as consumers reported they rely on word of mouth (56%) and search engines (38%) when considering which small businesses to shop.
About the Union Bank Small Business Holiday Spending 2021 Survey
Research was gathered through an online survey commissioned by Union Bank and conducted by global independent research firm Edelman DxI. The survey was completed by 1,000 U.S. consumers (age 18+) and 200 U.S. small business owners, sampled to be nationally representative. Data was collected between Oct. 5 and Oct. 13, 2021. The margin of error is +/- 2 percentage points.
About Union Bank
Union Bank is a full-service bank with a rich history of investing in our clients, communities, and colleagues throughout the West Coast for more than 150 years. Union Bank provides a wide range of personal and business banking products as well as wealth management services. With nearly 340 branches in California, Oregon, and Washington, Union Bank remains committed to serving the needs of its local communities. As a member of the Mitsubishi UFJ Financial Group (MUFG), one of the world’s largest financial institutions, Union Bank holds our clients’ best interests to heart and remains committed to investing in their success.
About MUFG Union Bank, N.A.
As of June 30, 2021, MUFG Union Bank, N.A. operated 305 branches, consisting primarily of retail banking branches in the West Coast states, along with commercial branches in Texas, Illinois, New York, and Georgia. We provide a wide spectrum of corporate, commercial, and retail banking and wealth management solutions to meet the needs of our clients. We also offer an extensive portfolio of value-added solutions for clients, including investment banking, personal and corporate trust, global custody, transaction banking, capital markets, and other services. With assets of $133.2 billion, as of June 30, 2021, MUFG Union Bank has strong capital reserves, credit ratings, and capital ratios relative to peer banks. MUFG Union Bank is a proud member of the Mitsubishi UFJ Financial Group (NYSE: MUFG), one of the world’s largest financial institutions with total assets of approximately ¥362.1 trillion (JPY) or $3.3 trillion (USD), as of June 30, 2021. The corporate headquarters (principal executive office) for MUFG Americas Holdings Corporation, which is the financial holding company, and MUFG Union Bank, is in New York City. The main banking office of MUFG Union Bank is in San Francisco, California.