By Anna LeRoux 

With the holiday shopping season in full swing, consumers are flocking to large national retailers, drawn by deep discounts and flashy promotions. For small, local businesses, the surge in consumer spending presents both an opportunity and a challenge. 

While many shoppers are lured by the convenience and perceived savings offered by major chains, small businesses are struggling to maintain their profit margins, brand identities and customer loyalty during the busiest shopping period of the year.

The advent of Black Friday, followed by the Christmas shopping rush, has long been a critical time for both large and small businesses. However, the contrast between the two is becoming more obvious as e-commerce giants such as Amazon and big-box retailers like Walmart dominate with enormous discounts and advertising budgets. This raises an important question for small business owners: How can they compete with the scale and prices offered by major retailers without sacrificing what makes them unique?

During Black Friday and the lead-up to Christmas, consumers are increasingly expectant of large discounts. Major retailers often discount popular items up to 70%, making it difficult for local shops to keep pace with prices. 

According to the National Retail Federation, the average American consumer was expected to spend $902 between seasonal items and holiday gifts in 2023, with a significant portion going toward big-box stores and online outlets. While large retailers can afford to sell products at a loss for a short period, small businesses, often operating with slimmer margins, are forced to make tough decisions about pricing.

For local businesses, lowering prices to compete with the big players is not always an option. Unlike major retailers, small businesses may not benefit from bulk purchasing power or supply chain efficiencies that allow large chains to reduce their overhead costs. While they can offer unique products and personalized customer service, these advantages don’t always translate to immediate sales during high-volume shopping periods.

Despite the dominance of big retailers, there is a noticeable shift in consumer behavior between generations. Gen Z — individuals born between 1997 and 2012 — is increasingly seeking out locally sourced, thrifted, handmade and personalized gifts over mass-produced items. 

Kendal Nobrega, U of A sophomore Apparel Merchandising and Product Development student, is a participant in Gen-Z’s shift to thrifted gifts. “Thrifted gifts have so much more personality and thoughtfulness behind them,” Nobrega said. “My best friend and I have recently started only gifting each other second-hand items. We both find this so much more intentional and I always love to see what made her think of me.”

According to a 2023 survey from the National Federation of Independent Business (NFIB), 50% of Gen Z respondents said they would be more likely to purchase gifts from small, local businesses during the holiday season compared to 25% of Baby Boomers. This generational difference highlights a growing trend that could offer small businesses an opportunity to stand out amid the large retail giants.

“I love going to flea markets for gifts because it feels so much more special finding something unique that fits the person,” said Delanie O’Dell, a U of A freshman. “I don’t have to worry that they’re going to get the same gift from someone else, and finding the gift in a small town flea market gives it a fun little backstory. It’s also more sustainable, which makes it even better.”

O’Dell’s sentiment is echoed by many Gen Z consumers who prioritize sustainability, uniqueness and the desire to support local economies. In a world that often values convenience over connection, this younger demographic is proving they are willing to go the extra mile for products that reflect their values, even if it means paying a higher price.

Annalise Robins, a U of A junior who is founder and president of the UARK Sustainable Fashion Club, emphasizes how thrifting plays into this trend. “I have been thrifting since childhood because it was how my family afforded most things,” she said. “As I got older, my friends wanted to join me thrifting. They wanted to save money and have unique pieces. Many of them were inspired by influencers like Emma Chamberlain, who, despite having money, prefers thrifting and antique stores in many cases.”

For small businesses, the ability to offer something unique, whether in the form of a handmade item or a carefully curated selection of products, is one of their greatest assets. Unlike larger retailers that may stock thousands of identical items, local stores have the flexibility to feature one-of-a-kind products that resonate with consumers looking for authenticity or a personal touch. This is especially true when it comes to gift-giving during the holiday season, a time when people want to express thoughtfulness and individuality.

Additionally, as more consumers become aware of the environmental impact of their purchases, the demand for sustainable, locally sourced products has risen. Many small businesses, particularly those that specialize in artisanal goods or vintage items, have embraced eco-friendly practices as a selling point. Maggie Paige, owner of Presley Paige in Fayetteville, Arkansas, curates a collection of many items that have a sustainable size and include recycled post-consumer materials.

Whether it’s upcycled materials, hand-crafted gifts or products made locally to reduce carbon footprints, these businesses have the opportunity to tap into a more responsible practice.

“Gen Z is also the most environmentally conscious generation. However, we do not have money” Robins said. “That is why myself and many of my friends will hunt antique shops, flea markets, and art/maker markets to find something affordable and often vintage.” 

As the holiday shopping season continues to be dominated by large retailers, small businesses must get creative if they hope to stay afloat. Offering exceptional customer service, creating memorable shopping experiences and building a strong community connection are all ways local shops can differentiate themselves.

In addition, many small businesses are turning to digital tools to reach a wider audience. E-commerce platforms, social media and email marketing campaigns allow small stores to advertise their products, connect with customers and even offer exclusive discounts during key shopping periods. In some cases, local businesses are collaborating with each other to offer combined promotions, encouraging consumers to shop local in exchange for a broader variety of inclusion with goods and services.

Robins, who is studying Apparel Merchandising and Product Development with a minor in Sustainability, also explained how thrifting is especially meaningful to her as a plus-size shopper. “Finding clothes at thrift, resale and antique stores is much easier and more affordable than buying new. There are very few retailers that I can walk in and walk out with something that will fit me.”

For small businesses, the holidays can be both a blessing and a burden. The surge in consumer spending can provide a much-needed boost to local economies, but the competition from massive retailers remains a challenge. As Gen Z continues to prioritize supporting small, sustainable and unique businesses, there is hope for a resurgence of locally driven commerce. 

However, the key for small business owners lies in finding ways to maintain their brand identity, offer quality products and create personalized shopping experiences that larger stores cannot replicate.

Ultimately, the future of small businesses during the holiday shopping season may not depend on who can offer the deepest discounts, but on who can offer the most meaningful connection to their customers. And in a generation increasingly looking for authenticity, that might just be the most valuable product.