Small-Business Holiday Spending Set to Nearly Double — Discounts Won't Save Them

The share of consumers planning to increase their holiday spending at small businesses has nearly doubled, rising to 20.2 percent in 2026 from 11 percent in 2024, according to a survey by digital marketing firm Constant Contact. That jump sounds like an early gift for Main Street. The catch is what shoppers expect in return: 52.6 percent cited sales and discounts as their main incentive to shop small — and most small retailers cannot win a price war to deliver them.

Who is driving the goodwill?

Constant Contact CEO Frank Vella reads the data as a show of mutual confidence. "Small-business owners are confident, and shoppers are ready to show up and support these businesses this holiday season," Vella said. Roughly one in five shoppers now intends to spend more at independent stores — a meaningful shift in a retail season where every incremental percentage point of intent translates into real revenue for firms with thin margins.

The motivation, however, is transactional. More than half of those surveyed named discounts as their primary reason to choose a small business over a larger competitor. On the supply side, more than 38 percent of small businesses said discounts were their top sales tactic for the holidays. Demand and strategy are aligned — around a lever that economists say is structurally weak.

Why can't small firms just cut prices?

Ernie Goss, a professor of economics at Creighton University in Omaha, puts the arithmetic bluntly. "It's difficult to discount below what you paid for the merchandise," Goss told Inc. A small retailer buying inventory in small volumes rarely has the cost base to undercut a large competitor and still cover rent and payroll.

The deeper problem is the opponent. Goss said online giants like Amazon are "really digging into" Main Street shops, with rural areas hit especially hard. Amazon's scale lets it absorb losses on individual items; a boutique cannot. Competing on price against that machine, Goss warned, is dangerous.

What is the 'K-shaped economy' doing to holiday sales?

Goss described a "bifurcated market" — often called the K-shaped economy — in which higher-income households drive holiday spending while lower-income shoppers pull back. In practice, that means the customers walking through a small shop's door this season are more likely to be affluent, while budget-constrained buyers migrate to the cheapest channel available, which is usually not the boutique on the corner.

Goss said spending at small shops and boutiques would likely be buoyed by the country's top earners. That is genuine good news for stores located where affluent shoppers live and browse. It is considerably less helpful for small businesses in the rural markets Goss flagged as most exposed to online giants.

What are owners overlooking?

Goss's core advice is that small-business owners should not overlook gaps in their customers' experience. If affluent shoppers are the ones propping up independent retail, service — not price — is the differentiator they can actually control. A seamless checkout, personal attention and a curated assortment cost less than a blanket discount and are harder for Amazon to replicate.

The survey's own numbers point the same way: 38 percent of owners leaning on discounts are chasing the 52.6 percent of shoppers who want them, into a fight Goss says they cannot win on cost. The owners who read the K-shaped market correctly will invest in experience for the high earners still spending. The ones who reach for the markdown tag risk discounting themselves out of the season.