Amid higher prices, how much will Bay Area holiday shoppers spend this holiday season?

Shoppers may be feeling squeezed by higher prices, but locally owned stores in the Bay Area are expecting to register big sales this holiday season, providing an anticipated boost to the region’s smaller downtowns after a year of economic challenges. Holiday shopping kicked off in earnest on Friday with retailers large and small offering deals to lure price-conscious customers, while Christmas tree lots welcomed families eager to ring in the season. For some tree shoppers, prices appeared to have actually come down from what they said they spent last year.

Andrew Aguero and his young family drove from Fremont to the Speer Family Farms’ Wonderland Trees lot in Alameda on Friday to find one in particular: a 7-foot Silver Tip Fir that cost about $180 last year. This year’s price tag? $120 for a similar tree. “It seemed a lot less this year, which was nice to see,” Aguero said.

“I’m not too worried about what it is today. Luckily, a lot of people in the Bay Area are fortunate enough to not worry about that. ” Shops are offering even more perks this weekend on Small Business Saturday, expecting to raise local foot traffic even as buyers have increasingly turned to online shopping.

For small-business districts across the Bay Area, the nationwide marketing effort is an opportunity to ease the sting of rising inventory costs, worker shortages and growing e-commerce competition. “It brings feet on the street,” said Tim Mulcahy, president of San Jose’s Willow Glen Business Association, which has about two dozen local businesses participating in Saturday’s event. “People will shop for Christmas and then also eat at the local restaurants.

” On Friday morning, Black Friday shoppers already were out supporting small businesses. San Mateo resident Shari Meyers stopped by Rock Flower Paper, an eco-friendly home goods and gift pop-up shop in Palo Alto, to pick up some tea towels she described as “ridiculously cute. ” The store had the added appeal of supporting a cause she likes — some proceeds from sales to the Ocean Conservancy — and a price that felt right.

According to the National Federation of Retailers, U. S. shoppers are expected to spend just under a billion dollars — a record $957 million to $967 million — this holiday season.

Annual sales growth, however, is forecast to be slower than in 2022, at 3% to 4%, in line with pre-pandemic trends. “Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” Jack Kleinhenz, chief economist with the retailers group, said in a statement. Even after prices spiked earlier this year, overall consumer spending has continued to grow .

That hasn’t come as a surprise to economists such as Chris Thornberg, founding partner of Beacon Economics — who, citing the law of supply and demand, said retailers tend to raise prices in response to people spending more money. “Let’s just be blunt, inflation is driven by the consumer,” he said. Thornberg pointed to shifting buying habits since the pandemic, as well as emergency stimulus payments, as factors that helped spark spending and fuel inflation.

While noting increased prices are weighing down lower-income families, he doesn’t expect higher costs to significantly damper holiday spending. The tight labor market is leaving many small businesses “struggling to have the staff on hand to meet the current level of demand,” however, as holiday shopping ramps up, Thornberg said. Jacqueline Woo, a sales associate at Rock Flower Paper in Palo Alto’s Town and Country Mall, said the store has been preparing for the busy shopping weekend by making sure shelves are fully stocked, and putting its holiday-themed collections and designs on display.

So far, she said, the pop-up, which opened at the start of October and was set to run through December, is doing so well it may stay longer. “It’s a great location,” she added. .