From season to season, as the cost of living increases, it becomes harder and harder to stuff stockings and cover the floor in gifts. However, in this time of change and unrest, businesses are rapidly adapting.

With interest rates climbing, inflation staying elevated and the economy facing uncertainty, people keep a tight hand on their finances, putting small businesses and organizations on the chopping block. Leading them to look for ways to be palatable to those who cannot afford to splurge this season.

“I think that there’s just a lot of uncertainty right now,” Senior Manager of Data and Analytics at Comerica Bank John Mcarville said. “So, I think in general, we’re seeing a lot of people just put off some of those purchases that they otherwise would be making if those components were not in play.”

As shoppers feel the pinch, many continue to scale back on non-essential purchases. This shift is especially hard on small businesses, which rely heavily on local customer support to stay afloat. As a result, discretionary spending is the first to go, a trend that creates a challenging holiday season for smaller enterprises.

“Small businesses are going to feel that [inflation] because a lot of people that would otherwise be spending money don’t have the ability to, and that’s why we see a phenomenon where Wall Street and Main Street are very different,” Wells Fargo Senior Vice President Investment Officer Curt Kruse said.

However, small businesses are finding ways to not just survive, but thrive during the holiday season. While large retailers may have the advantage of scale and buying power, small enterprises are leveraging their unique strengths to attract and retain customers.

“Something I personally have gone through was I wanted to buy a lawnmower,” Kruse said. “A simple lawnmower. Well, you can go to Menards, you can go to Lowe’s, you can go to Home Depot. You can walk in to buy a lawnmower and you have all different kinds to choose from. However, I ended up buying my lawnmower from a place called St. Louis Equipment, a little locally owned place, because when I walked in there to look at the same lawn mowers that everyone else had, the service that the gentleman provided was the seller. I mean, it wasn’t like they were charging more, but they found a way to focus on me specifically and all of a sudden, I wasn’t just buying a push mower, I was buying the right push mower for me. And that was a small business guy understanding that if they had the ability to spend a little bit of time, they were going to get the business they needed.”

By focusing on their ability to deliver highly personalized attention and products that larger chains cannot easily replicate, small businesses carve out a loyal customer base willing to pay a premium for that level of care and customization. Additionally, small businesses leverage their deep community ties to respond quickly to evolving consumer preferences.

“I think it’s because smart businesses understand like ‘Wait a minute, if people have wage growth, but that wage growth isn’t keeping up with the cost of living, how are they going to buy our product?’,” Kruse said. “ If you go on Amazon right now, they have programs constantly. It’s like you can buy this now and pay just $6 a month for it. That’s directly because the market conditions for the vast majority of the people out there don’t have the ability to go pay for it all right now for the holidays.”

The holiday season poses new challenges due to the struggles the economic state raises, but small businesses and organizations are rising to meet them by leaning into what sets them apart. With inflation impacting every household, local businesses are meeting customers where they are, offering flexible payment options and focusing on delivering a memorable shopping experience that resonates beyond the sale.

“I feel for small business owners,” Kruse said. “ I mean I don’t lose a lot of sleep, or have a lot of sympathy for Apple. They’re a great company, but they don’t need help. Small organizations do and we need to do a better job of getting regulation out of the way so they can operate and do what they do really, really well.”