Las Vegas businesses have high holiday hopes despite inflation

Santa’s Wrap transforms into a Christmas-themed store every June. While seasonal home decor and gift shops in Las Vegas start their holiday push earlier than traditional retailers, it’s finding that this time of year is right around the corner — thanks to inflation.

Co-owner Beth Tom said her 18,000-square-foot store had already started its holiday promotions, and that it focused more on promoting Christmas products, with less than 90 percent of the store’s products devoted to the holiday.

“We see people being more cautious, but people are not going to miss Christmas,” Tom said.

The holiday season and the sales that go with it are off to an early start this year. But as businesses navigate shocking economic conditions that combine a strong labor market with high inflation, they’re still hoping for a successful season.

Holiday retail sales in Nevada are expected to increase 8 percent this year, reaching a record $6.5 billion, according to the Retail Association of Nevada. The trade group cites November and December as the traditional holiday shopping season.

“We expect spending to continue to be strong during the holiday season,” said Brian Wachter, senior vice president of RAN. “We note with some trepidation that people are using lines of credit and savings this holiday season.”

Nationally, holiday sales are also expected to be strong, with sales growing between 6 percent and 8 percent annually, totaling between $942.6 billion and $960.4 billion, according to the National Retail Federation.

“It’s the strength of the labor market that’s really fueling spending. Even though we have inflation, the demand for labor remains strong,” NRF chief economist Jack Kleinheinz said in a media call this month. “When you look at the fact that consumers have available credit, and certainly job gains are generating more spending.”

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But not everyone is buying into the strong holiday projections.

Andrew Woods, director of the Center for Business and Economic Research at UNLV, said projected sales growth could be offset by overall inflation.

“I think those (NRF) numbers are from a headline perspective and are a little misleading … once you factor in inflation,” Woods said.

Inflation rose to 7.7 percent in October from a year earlier, 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 the fastest pace since the early 1980s — to a range between 3.75 percent and 4 percent, the highest level in nearly 15 years.

Those increases have increased borrowing costs for mortgages, auto loans and credit cards, among other loans. Fed officials want higher rates to slow borrowing and spending and ease inflationary pressures.

Early start

Paige and Rye, a retailer focused on locally made products, started the holiday season on Nov. 1, but owner Lauren Tieru still thinks it’s too late.

“We put up the Christmas trees, I think the day after Halloween,” Tierru said. “And I also think it was a little later than some of the other stores.”

Wachter said it has become common for retailers to push early for the holiday shopping season.

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“Consumers have repeatedly asked for, and enjoy, the ability to spread the spending they expect to do over multiple pay periods for the holiday season,” he said.

Santa’s wrap said an early start is also good for business because it gives the retailer more time to sell its seasonal products — and more time means increased sales can help offset supply and labor costs.

“The labor cost is very high. Everything is very high. Nothing has happened this year,’ she said. “The margins are very, very, very low but you still have to have the product and make sure you meet (the demand).”

Tom said the store has focused on highlighting its sales, such as 70 percent off items that can fit in a gift basket.

Tieru said his challenge is to convince customers to spend a little more to support local artists and vendors sold at Paige and Rye. She said prices are slightly higher because many items, such as skin care products, are small-batch and locally manufactured. And it’s difficult for small businesses to offer deep discounts, especially as vendors raise their wholesale prices to combat higher supply costs.

“I think people are like, ‘Oh, I can order cheaper somewhere else,'” Tieru said. “I definitely see a lot 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 more people finance their purchases.

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A report from the Federal Reserve Bank of New York on Tuesday found that as more households rely on credit cards to pay bills, nationwide credit card balances rose 15 percent in the July-September quarter from a year earlier, the largest year-over-year increase. In two decades.

“We’re seeing more of this — consumers are dipping into their savings … to finance lifestyle or purchases like never before,” Woods said. “At the same time come January, we’re all going to have to pay those bills, and if your expenses were higher they’re going to be higher.”

Online retailer Busy Beez Toy Box launched its Las Vegas business in September and hopes to cash in on its first-ever holiday shopping season.

Founders Jeff and Gina Medeiros said they plan to offer several deals through Black Friday, such as free shipping and 20 percent off toys, as well as a promotion offering 15 percent off to consumers who subscribe to its newsletter.

And as Southern Nevada small businesses push special deals to jump-start early consumer spending, most are still confident this year’s holiday shopping season will be strong despite inflationary pressures and talk of a recession.

“These are definitely our money-making months — November and December,” Tieru said. “This will really be the time to achieve the best sales goals of the year with the late months coming up.”

Contact Sean Hemmersmeier at [email protected] to follow @seanhemmers34 on Twitter. The Associated Press contributed to this report.


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