How Tampa Bay’s high inflation could affect holiday shopping this year

St. Petersburg’s annual Shopapalooza Festival, a spirited holiday market happening over Thanksgiving weekend, is expected to be even bigger this year with over 350 local businesses participating. But event organizer Ester Venouziou said she’s telling vendors to temper expectations this year.

Shoppers came out in droves to the festival last year as consumer spending soared during the pandemic rebound. Holiday shopping broke records last year, with U.S. consumers spending 13.5% more than 2020. Overall, spending reached nearly $890 billion in sales, according to the National Retail Federation.

While Venouziou said she still expects a big crowd over the weekend, she anticipates shoppers may buy less or choose to purchase cheaper items as they rein in spending this year.

“Last year, so many [businesses] sold out of everything. So I’m trying to tell them don’t expect quite as much,” said Venouziou, founder of the business directory LocalShops1 which hosts Shopapalooza at Vinoy Park on Saturday and Sunday. “We’ll have a lot of people there but they might be spending a little bit less.”

The economy has changed from a year ago with high inflation and rising costs of living. Tampa Bay has seen some of the sharpest price increases — from rent to grocery store staples — in the nation. Despite forecasts for another record-breaking holiday season, inflation is expected to put pressure on consumers, especially those with lower incomes and push them to shop more at big-box retailers like Target or Walmart rather than local small businesses, according to a retail holiday survey from commercial real estate firm JLL.

“It’s prudent for any business owner to be concerned about how inflation is going to impact consumer spending right now because this is a very significant inflation,” said Justin Greider, head of Florida retail for JLL. “And while we’ve continued to see spending numbers stay high, that’s been a surprise.”

U.S. shoppers are expected to spend up to $960.4 billion during November and December, up 6% from last year, according to the National Retail Federation. It highlights a bit of a conundrum where consumer confidence is at record lows while spending continues to rise.

But that doesn’t mean everyone is spending equally, Greider said. There’s a growing disparity between high-income and low-income consumers.

Nearly half of shoppers earning less than $50,000 a year are planning to “significantly” spend less for the holidays because of inflation, according to JLL’s survey of 1,080 consumers across the country. Less than a quarter of those earning $150,000 or more plan to cut back significantly.

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While inflation is showing signs of slowing, it’s still high in Tampa Bay, where prices are up 10.5% from September 2021, according to the U.S. Bureau of Labor Statistics.

Shoppers are looking to cut back by finding more sales, buying cheaper gifts or shopping for fewer people, JLL found. Others also said in the survey they’re more likely to shop at mass merchandisers this year where they can find more deals.

While a growing number of shoppers can’t afford to shop locally, higher-income shoppers are expected to spend more this year at small businesses. Grieder said hopefully that can help small businesses have a good return during the most important shopping season ahead of a possible recession that some economists are predicting could happen in the next year or two.

Allie Padin, who opened a gift and home furnishing store in time for the holidays, said she made an effort to have products in stock on both ends of the price spectrum. The Canary in downtown St. Petersburg debuted Nov. 10 and features a variety of products with a mission to make gift finding easier.

“I want to be sure that no one feels intimidated or uncomfortable walking in here because they may not find something that is at the price point they’re looking for,” Padin said. “I understand that it is a struggle and we all have different amounts of money we can spend, but that shouldn’t be what stops someone from shopping down the street.”

The movement to support local small businesses grew out of the Great Recession in the late 2000s, said Shopapalooza’s Venouziou. Economic uncertainty can sometimes help mom-and-pop shops as people become more cognizant of how they’re spending their money and want to contribute to their local communities. And this year, many business have struggled with staffing, supply chain issues and rising rents, Venouziou said.

Spending locally also adds more to the surrounding economy. About two-thirds of a dollar spent locally goes back into the community, according to an American Expresses’s 2018 Small Business Economic Impact Study.

While people might have less money to spend for the holidays, Venouziou said they are likely to be intentional and want their gifts to be meaningful, which is where small businesses can step in.

“Small businesses have custom items and also there’s the personal experience of knowing where they’re coming from,” Venouziou said. “So what I’m telling our members is to focus on what makes small businesses special.”

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The Tampa Bay Times has a team of reporters focusing on rising costs in our region. If you have an idea, question or story to tell, please email us at costofliving@tampabay.com.

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