When Consumer Caution Meets Main Street: The Economic Reality Behind Small Business Saturday's Steep Decline

Small Business Saturday, the annual shopping event championed by American Express and co-sponsored by the SBA since 2011, faced an unexpected headwind in 2025. According to American Express’s Consumer Insights survey, spending at independent retailers and restaurants hit $18 billion—a dramatic 18% drop compared to $22 billion the previous year. What makes this decline particularly telling is that it reflects a broader shift in how Americans are making purchasing decisions in an uncertain economic landscape.

The Online Migration Masks a Deeper Problem

On the surface, the National Retail Federation reported that 62.7 million shoppers visited brick-and-mortar locations—nearly flat year-over-year. Yet the story changes significantly when examining where actual purchases occurred. Online shopping surged to 63 million consumers, up 16% from 54 million the prior year. The catch? Much of this digital activity likely flowed to major e-commerce platforms rather than small business websites, undermining the very purpose of a day dedicated to supporting local merchants.

RetailNext’s data painted an even starker picture: nationwide retail foot traffic declined by nearly 9%, with some regions hit harder than others. A severe Midwest snowstorm the night before reduced traffic by 42% in affected areas, while the Northeast, South, and West each experienced a 4% dip—essentially matching Black Friday’s 3.6% decline. As Joe Shasteen, RetailNext’s head of advanced analytics, observed: “Shoppers showed they’re done with the impulse-driven, one-day frenzy. Prices, tariffs and tighter budgets pushed people to shop with discipline, not adrenaline.”

Economic Anxiety Trumps Community Spirit

The irony is stark: 77% of consumers surveyed by American Express agree strongly that supporting neighborhood businesses matters. Yet aspirations collided with financial reality. The Conference Board’s Consumer Confidence Index dropped seven points in November alone—falling from 95.5 to 88.7—while Michigan’s Consumer Sentiment Index hovered dangerously close to its June 2022 low. “Consumers remain frustrated about the persistence of high prices and weakening incomes,” explained Joanne Hsu, director of the University of Michigan Surveys of Consumers.

This economic squeeze has democratized discount-seeking behavior. Dollar General is now attracting high-income shoppers at levels unseen since the pandemic. At Walmart, 75% of U.S. market share gains in Q3 came from households earning over $100,000. Similarly, Costco shoppers are trading down from national brands to private-label Kirkland products at accelerating rates. Small retailers, lacking the scale or pricing power to compete, have been pushed further to the margins.

Small Businesses Face an Existential Holiday Challenge

The stakes couldn’t be higher for Main Street. According to Intuit QuickBooks research among 1,000 small business owners surveyed in September, holiday sales generate nearly half of annual revenues. What’s alarming: 91% of small businesses now view the holiday season as critical to survival—a sharp jump from 61% the prior year. This dependency has intensified competitive pressure. Two-thirds of small businesses now identify big-box retailers as major competition, up from just 35% last year.

An Intuit survey of 6,000 consumers revealed the disconnect: while 90% said supporting small businesses was important, 42% admitted higher prices might prevent them from acting on that intention. Only 33% of small business owners believed big-box competition was a holiday threat last year; that figure has flipped to 62% this year.

SBA and American Express Evolving the Support Model

Recognizing that one shopping day cannot solve systemic economic challenges, Kelly Loeffler, the SBA’s administrator, and American Express have broadened their approach. What began in 2010 as a single-day marketing push evolved into a year-round “Shop Small” initiative in 2013. The pandemic prompted further expansion—including a dedicated small business grants program and, more recently, disaster recovery funding for businesses impacted by hurricanes.

American Express has pledged $100 million in grants through 2028, having distributed nearly $40 million to approximately 2,500 small businesses by year-end. For 2025, the company allocated $5 million to support 250 recipients—roughly five per state—each receiving a $20,000 grant to independently-owned businesses with fewer than 20 employees and at least one U.S. physical location. Recipients are selected by Main Street America, with applications accepted through January 16.

An additional incentive exists: every dollar spent using an American Express card on Small Business Saturday is donated to the grant pool. Last year, this mechanism generated matching funds, turning the initial $5 million into $10 million in total support.

The Broader Economic Equation

The challenges facing small businesses extend beyond seasonal shopping patterns. The SBA reports that small enterprises employ half the private-sector workforce and generate nearly half of GDP. With 34 million small businesses operating across the nation, their health directly impacts economic resilience. Yet policy headwinds—particularly tariff regimes—have complicated their competitive position against multinational retailers.

Small Business Saturday’s 18% spending decline isn’t merely a retail statistic; it’s a snapshot of consumer behavior during an era of economic uncertainty, where prudence has replaced generosity and survival instinct has superseded community loyalty.