Santa’s Wrap transforms into a Christmas themed store every June. While the seasonal home decor and gift shop in Las Vegas gets an earlier holiday start than traditional retailers, this year it finds itself right on time — thanks to inflation.
Co-owner Beth Tom said that while her 18,000-square-foot store started its holiday promotions earlier, it paid more attention to promoting its Christmas products, just under 90 percent of the store’s products are dedicated to the holidays.
“We see people are very careful, but people are not going to miss Christmas,” said Tom.
The holiday season and the sales that come with it start early this year. But as businesses navigate confusing economic conditions that pair a strong labor market with high inflation, they are still hoping for a successful season.
Holiday retail sales in Nevada are expected to grow 8 percent this year and reach a record $6.5 billion, according to the Retail Association of Nevada. The trade group noted the traditional holiday shopping season spans November and December.
“We expect spending to continue to be strong in the holiday season,” said Bryan Wachter, RAN senior vice president. “We note with some trepidation that people are using lines of credit and savings during this holiday season.”
Nationally, holiday sales are also expected to be strong with sales growing between 6 percent and 8 percent year over year, totaling between $942.6 billion to $960.4 billion, according to the National Retail Federation.
“It is the strength of the labor market that is really driving the spending. Even though we have inflation, the demand for labor remains strong,” NRF Chief Economist Jack Kleinhenz said in a media call this month. “If you look at the fact that consumers have available credit, and certainly job gains generate more spending.”
But not everyone is buying into the robust holiday projections.
Andrew Woods, director of the Center for Business and Economic Research at UNLV, said the projected sales growth could be negated by overall inflation.
“I think those (NRF) numbers are from a principal standpoint and a little misleading … once you factor in inflation,” Woods said.
Inflation reached 7.7 percent in October from a year ago, down from a peak of 9.1 percent in June, but still a level not seen in 40 years. At the same time, the Federal Reserve raised its key short-term rate this year at its fastest pace since the early 1980s — to a range between 3.75 percent and 4 percent, the highest level in about 15 years.
These increases increased the borrowing costs for mortgages, car loans and credit cards, among other things. Fed officials plan to slow higher rates to boost borrowing and spending and cool inflationary pressures.
Paige and Rye, a retailer that focuses on locally made products, kicked off the holiday season on Nov. 1, but owner Lauren Tieru still thinks it was too late.
“We put up Christmas trees, I think the day after Halloween,” Tieru said. “And I think even that was maybe a little bit later than some other stores.”
Wachter said it’s becoming more common for retailers to push for an early holiday shopping season.
“What consumers have repeatedly asked for, and enjoy, is that ability to spread the spending they expect to do for the holiday season over multiple pay periods,” he said.
Santa’s Wrap said an early start is also good for business, as it gives the retailer more time to sell its seasonal products — and more time means more sales that can help cover rising supply and labor costs.
“Labour costs are much higher. Everything is much higher. There is nothing that has gone down this year,” she said. “Margins are much, much, much lower, but you still have to have the product and make sure you meet the (demand).”
Tom said the store focused on prominently displaying its sales, such as 70 percent off items that could fit in a gift basket.
Tieru said her challenge is convincing customers to spend a little more to support the local artists and vendors sold at Paige and Rye. She said prices are slightly higher because many items such as her skin care products are small batch and locally produced. And offering deep discounts is difficult for the small business, especially as sellers raise their wholesale prices to combat higher supply costs.
“I think people are like, ‘Oh, I can just order it cheaper somewhere else,’ ” Tieru said. “I definitely see more where we have to convince people that it’s worth the price.”
‘Money Making Months’
Woods expects consumer spending to ease early next year as many finance their purchases.
A report Tuesday from the Federal Reserve Bank of New York found that more households are relying on credit cards to pay bills, with nationwide credit card balances jumping 15 percent in the July-September quarter from a year ago, the largest year- to-year increase over two decades.
“We’re seeing this more and more — consumers are taking a dip in their savings … to finance the same lifestyle or purchases they had before,” Woods said. “At the same time come January, we all have to pay those bills, and they’re going to be higher if your spending was higher.”
Online retailer Busy Beez Toy Box launched its Las Vegas business in September, hoping to cash in on its first holiday shopping season.
Founders Jeff and Zina Medeiros said they plan to offer a number of deals through Black Friday, such as free shipping and 20 percent off toys as well as a promotion offering a 15 percent discount to consumers who sign up to its newsletter.
And while small businesses in Southern Nevada are pushing special deals to kick-start early consumer spending, most are still confident this year’s holiday shopping season will be strong despite inflationary pressures and talk of a looming recession.
“Those are definitely our money-making months — November and December,” Tieru said. “This will really be the time to get the best sales goals of the year to make up for the slow months ahead.”