Small retailers in Twin Cities worry holiday season might leave them behind

Board and Batten boutique in Lakeville used to be closed Thanksgiving week. It allowed owner Mary Fritz to decorate the windows and add displays to her apparel and home decor store for Small Business Saturday.

The coronavirus pandemic has changed that routine and about every other one Fritz has. She was open every day but Thanksgiving, offering small deals.

"This holiday season will be the difference of us staying in business or not," Fritz said. "It's a lot of sleepless nights, my kids helping box and tag orders, and my husband delivering locally. It's a full family adventure."

Nearly 50% of small-business owners fear they will not earn enough money in the all-important fourth quarter to stay afloat next year, according to a survey by Alignable, an online referral network in Boston.

"The lack of cash that small businesses have on hand is a major problem going into the holidays," said Josh Knauer, general partner at JumpScale consulting firm in New York. "The economic impact could be worse than we originally thought."

The shift to online shopping that has helped big retailers such as Minneapolis-based Target and Richfield-based Best Buy has analysts and small businesses concerned leading into Small Business Saturday, independent retailers' answer to Black Friday. So does a lack of a second stimulus package that could help them get through the pandemic, according to surveys by small-business groups.

This year's survey of Twin Cities shoppers by Accenture found that they plan to reduce holiday budgets by 20% over last year's spending. On average, they plan to spend $541 compared with $670 last year.

But the Accenture survey also found that more than 60% of local shoppers want to support and shop small businesses this year.

"That's nearly the highest percentage of the 17 cities we surveyed. Only Austin, Texas, and New York City were higher," said Lori Zumwinkle, Accenture's North America retail leader.

Small retailers have noticed the shift.

"People have stepped up this year and realized we're going to lose a lot of small businesses without their support," said Dan Marshall, co-owner of Mischief Toy Store on Grand Avenue in St. Paul. "I think most people realize what's at stake."

Mischief can only allow eight customers in at a time to allow for safe distancing, so it has had to get creative, Marshall said. It now has private appointments, plus the store puts together quarantine care packages, a Hanukkah seven-present package and free delivery on bike within 4 miles of the store.

"We want to use our 20 years of experience as toy sellers to find gifts for people shopping in store or out," he said. "A customer may say 'I have a kid who likes Minecraft and animé,' and we wrap it all up and get it sent."

Nicole Jennings, owner of Queen Anna House of Fashion in Minneapolis' North Loop neighborhood, also is hoping her customers rely on the store's expertise and fashion sense.

She decided to close on Black Friday and put all sales promotions online and on her app. "I must keep my team safe along with the clients we interact with daily," she said.

Jennings, who had an e-commerce business before she opened Queen Anna's retail store, aims to have more website sales than store foot traffic for the holiday season. "I meet my clients where they're at [virtually] and still give them the same experience they would have in person but now online," she said.

Her clothes lean fancier — not needed as much this year. So she and her staff are suggesting ways to make a dress less formal, for example wearing it with a chunky sweater and tights, she said.

Tyler Conrad, who owns GoodThings gift shops, said his six Twin Cities stores in a typical year do about 25% of annual business between Thanksgiving and Christmas. This year, he expects revenue to be down about 30% due to lower foot traffic.

His online sales have started to pick up and he's trying to minimize the loss with curbside pickups, private shopping appointments, phone orders, video chats and loyalty programs.

Many small-business owners said they anticipated the downswing by purchasing 20 to 30% fewer goods for the fourth quarter.

Conrad said he shifted his buying away from holiday decor that usually goes on clearance Dec. 26.

"We bought things that could carry us into next year," he said. "More of our everyday bestsellers and less Christmas."

Store owners worry, though, that an already disrupted retail industry will produce even more vacant storefronts as businesses close because of the pandemic.

Jake Poe, co-owner of the Peak at Albertville Premium Outlets, said in the past five years he has watched 23 stores, mostly national chains, close in the Promenade across from the main outlet center in Albertville.

"Customers tell me on a daily basis that we're a destination store now because they don't normally get to this side of the mall," he said.

He has added retail happy hours, private shopping events for families or groups of friends, and a lot more cozy sweaters and loungewear.

Karl Benson, co-owner of Cooks of Crocus Hill stores in St. Paul, Minneapolis and Stillwater, is crossing his fingers that his holiday revenue approaches last year's.

Like fellow small-retail owners, he's working harder to accomplish that. He too has added private shopping appointments. And a newly revamped website offers nearly 80% of what customers find in his stores, leading to e-commerce receipts tripling.

What keeps him hopeful is the new emphasis on cooking by millennials as they eat out less and fix home-cooked meals more often. "Few shoppers are asking for the hot new gadget this year," Benson said. "They're asking for pantry and basic cooking stuff."

Benson also is worried about empty storefronts hurting those retailers who are left.

"When J. Crew closed across the street, it was one less reason to be on Grand Avenue," said Benson. "The evil isn't national or local — it's empty storefront evil. At some point you have to say, 'Hey this is my community.' "

Danette Andley, who lives a few blocks from Grand Avenue in St. Paul, said she's completely changed her holiday habits this year.

"I shopped for an hour and a half along Grand Avenue yesterday," she said as she went back for more on Wednesday. "I used to buy on Amazon. This year, I'm going into stores like Penzeys, Red Balloon and GoodThings or picking items up curbside. These businesses matter to the future of my neighborhood. We have to support what's here. I'm encouraging my friends to do the same."

John Ewoldt • 612-673-7633