Small businesses experienced robust sales in December, as holiday shoppers completed their gift buying, according to the Fiserv Small Business Index. This positive trend indicates a healthy economic climate for small businesses despite shifting consumer spending patterns.
The seasonally adjusted index reached 146 in December, a three-point increase from November. This data, compiled by Fiserv, a leading payment and financial technology provider, reflects point-of-sale transactions from approximately two million U.S. small businesses, encompassing card, cash, and check payments both in-store and online. This comprehensive data set provides valuable insights into the performance of the small business sector.
“Despite evolving consumer behavior, small business sales maintained their upward trajectory in December,” noted Prasanna Dhore, Chief Data Officer at Fiserv. “Consumers notably increased spending on services, while retail sales remained strong. However, restaurant spending decreased, accompanied by a decline in average ticket sizes.”
Year-over-year data reveals a 4.9% increase in small business sales and a 5.5% rise in total transactions for December. This growth aligns with trends observed in larger corporations. The National Retail Federation reported a 4% increase in holiday sales for November and December, totaling $994.1 billion, compared to the previous year. This holiday period also saw a 3.9% sales increase compared to the preceding two months, exceeding the NRF’s initial projections of 2.5% to 3.5%.
Retail remained a strong driver for small businesses, with sales rising 4.9% and transactions increasing 5.8% in December. Top-performing categories included general merchandise, clothing, shoes, jewelry, furniture, electronics, appliances, and groceries. This broad-based strength across various retail segments underscores the resilience of consumer spending.
In contrast, the restaurant sector experienced a decline, with sales dropping 3.4% compared to December of the previous year, despite a 4.1% increase in transactions. Full-service restaurants, encompassing upscale and family dining establishments, faced the most significant challenges, while quick-service and fast-casual restaurants fared better. This divergence highlights evolving consumer preferences within the dining sector. The decrease in average ticket size by 7.4% compared to 2023 contributed to the overall sales decline, suggesting changes in consumer spending habits.
In conclusion, December brought significant success for small businesses, particularly in the retail sector, fueled by robust holiday spending. However, the restaurant industry faced headwinds due to shifting consumer behavior and reduced average ticket sizes. The Fiserv Small Business Index offers valuable data-driven insights into the dynamic landscape of the small business economy.
