Santa on a budget: Businesses stay cheery as holiday season nears

After a year of rising interest rates and lowering inflation, businesses in Las Vegas are hoping for a strong holiday season to boost their sales.

Santa’s Wrap, an 18,000-square-foot home decor store, has been putting out Christmas items for sale since April, said Beth Tom, co-owner of the store. Tom said that it’s been a challenging year for business with fewer customers coming into the store, but she hopes the holidays will give it a boost heading into the new year.

“We’re still very optimistic about the season coming up,” Tom said. “We’re hoping that people come out and want to shop. … We definitely see an apprehension in people.”

Andrew Woods, director of the Center for Business and Economic Research at UNLV, echoed this sentiment that shopping should still happen throughout Nevada ahead of the holidays but don’t expect a record year for spending.

“I certainly don’t think the Grinch is going to steal Christmas … but Santa is going to be a lot more budget conscious,” Woods said.

‘Looking not spending’

A focus on limited spending has been seen by Lauren Tieru, owner of Paige and Rye, a retailer that sells decor and clothing products online as well as at local pop-up events and markets throughout Las Vegas.

“I feel like a lot of people are out and about at markets and pop-ups, but they’re looking and not spending,” Tieru said. “It used to kind of be like,’ Oh, I want that, it’s that cute.’ Now it’s just like ‘I want it but I really don’t need it.’ I hear that a lot more right now.”

Even with some apprehension in spending, retail sales this holiday season are expected to grow from last year. The National Retail Federation predicted that holiday spending in November and December would increase by 3 to 4 percent compared to last year and total somewhere between $957.3 billion and $966.6 billion. This level of growth is lower than what was seen in 2022 when NRF estimated there was a 5.4 percent increase in holiday spending.

A more tempered approach to holiday spending could be due to the high level of credit card debt and persistent levels of inflation, Woods said.

In the third quarter of 2023, credit card debt reached a record level of $1.08 billion, according to the Federal Reserve Bank of New York. The most recent inflation data shows the overall inflation rate was 3.2 percent in October, although this is higher than the Federal Reserve’s goal of bringing inflation down to 2 percent, it’s still an improvement over the same time in 2022 when the rate was 7.7 percent.

Although inflation is improving, the high level of debt and high interest rates are lowering people’s economic expectations, Woods said.

“The American consumer, despite that they are spending, they are also very grumpy about the economy because just declining inflation rates doesn’t mean that prices have come down, it just means the growth is slowing,” he said.

Discounts helping drive spending

Even with the apprehension of people around spending both Tom and Tieru expect the holiday season to bring healthy sales. This sentiment was echoed by Christina Wilson, a marketing representative for Zia Records, a record store with two locations in Las Vegas that also sells other physical media like DVDs.

“No matter what, people somehow figure out how to spend money during November and December, whether they can afford to or not,” she said.

Wilson said Zia Records expects sales to grow this season since its brick-and-mortar locations are getting more people in them each year since the pandemic and the company has a strong online retail presence. Wilson said Black Friday and its sales discounts help boost interest in the store’s holiday offerings.

Zia Records isn’t alone in using sales to drive interest in holiday shopping, Paige and Rye also offer discounts for items sold online since those sales are lower than in-person shopping, Tieru said.

Discounts are also being used to drive interest in shopping for food and other items at the Grocery Outlet Bargain Market, a bargain-focused grocery store that opened on Aug. 31 in southwest Las Vegas. The grocery store is offering a special sale — if $50 is spent on select items then a turkey can be sold for $21 off its original price, said Ernesto Sesma, co-owner and operator of the Las Vegas Grocery Outlet Bargain Market.

This sale has driven a lot of people to shop for holiday food at the market, and the overall discounts at the store are driving interest, he said.

“We almost sold out of turkeys already, because of this special, so I got to order more,” Sesma said. “Once it gets closer to the holiday season, I think people are going to see that we are cheaper than most grocery stores out there, and they’re going to want to come in and try it out.”

Woods said this focus on sales and discounts could also apply to retail spending and is called the “substitution effect” by economists.

“Where people are purchasing down in terms of the type of goods they’re getting, they still want to buy … but instead of shopping at a more high-end grocery store, they might be more bargain hunting now,” Woods said.

Sesma said his market has received more business as people are looking for discounts wherever they can.

“I’ve been to the Albertsons and I have been to the Smith’s, and I hear from customers that they’re not going over because they’re too expensive,” he said.

The focus on sales and discounts does worry Tieru a bit since she said it can be hard for a small local business like hers to match prices seen in bigger stores or online retail giants like Amazon. She hopes shoppers this season keep prices in mind but also that shopping at local businesses has a bigger impact than shopping at big chains or retailers.

“People that own small business and local businesses rely on these purchases, and they’re not making a huge profit or the amount of numbers that big box chains or online retailers are making,” Tieru said.

Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com. Follow @seanhemmers34 on X.