Small businesses are heading into the 2026 holiday season with strong revenue expectations, but many are overlooking opportunities to turn new shoppers into repeat customers, according to a new survey by marketing platform Constant Contact.
The company’s annual Small Business Now Holiday Report found that 77.2 per cent of small business owners are confident or extremely confident they will meet their holiday revenue targets. However, more than 70 per cent have no plans to encourage new customers to join their email lists or loyalty programs, despite 75 per cent of consumers saying they intend to shop at a new small business this year.
The findings point to a gap between attracting holiday shoppers and retaining them beyond the busy season, as businesses contend with inflation, changing consumer expectations and increasing use of artificial intelligence (AI) in their operations.
The research surveyed more than 1,800 small business owners and more than 2,600 consumers in Canada, the United States, the United Kingdom, Australia and New Zealand.
“Small business owners are confident, and shoppers are ready to show up and support these businesses this holiday season,” said Frank J. Vella, CEO of Constant Contact.
“Three in four shoppers are looking to try a new small business this season, and every one of those first visits is a chance to earn a regular customer. The businesses who come out ahead will be the ones with a plan to bring those customers back in February and again in June. Our job at Constant Contact is to make that easy, and to do as much of that work for them as we can so they can focus on running their business.”
Inflation remains a concern for businesses and consumers
Inflation was identified as the leading obstacle by both consumers and small businesses, cited by 31.5 per cent of shoppers and 30.1 per cent of business owners.
Despite the economic pressure, small business owners remain optimistic about the upcoming season. The survey found that 71 per cent rated their holiday marketing efforts in 2025 as effective across the board, contributing to confidence about achieving this year’s revenue targets.
Discounts are the leading sales tactic among small businesses, with 38.1 per cent of owners identifying them as a priority. That approach reflects consumer purchasing considerations, with 52.6 per cent of shoppers identifying sales and discounts as the main reason they choose one retailer over another.
The survey also found growing consumer interest in supporting independent businesses. The proportion of shoppers specifically looking to increase their support for small businesses has doubled over the past two years, reaching more than 20 per cent.
Product selection and customer experience are also important considerations. Some 48.5 per cent of consumers said they choose small businesses for original or more exciting gifts that larger chains cannot match, while 43.9 per cent cited a more enjoyable shopping environment and 26.2 per cent valued personalized customer service.
Practical shopping incentives also factor into consumer decisions. Flexible pickup and return options, along with free shipping, appeal to 44.1 per cent of shoppers, while 21.9 per cent of small businesses already prioritize those offerings.
Businesses turn to AI to streamline holiday operations
AI is becoming part of small businesses’ operational strategies, with more than 68 per cent of owners planning to use the technology to streamline processes.
The report found businesses are focusing on applications that support marketing and operations, including drafting marketing content, creating product imagery and forecasting inventory demand.
Specifically, 33.6 per cent plan to use AI to draft marketing content, 32.2 per cent intend to use it to create product images and 30.9 per cent expect to apply it to inventory forecasting.
The survey also found that 56.3 per cent of consumers prefer AI over human interaction for marketing assets. However, businesses are generally reserving customer service inquiries for human interaction, where owners believe a more personalized approach is important.
Vella said small businesses are using the technology to reduce the time spent on routine tasks while maintaining personal relationships with customers.
“Small business owners are being smart about AI; they’re using it where it saves the most time behind the scenes and keeping the personal touch where customers want it,” said Vella.
“The follow-up is where those two come together. AI can draft the email in seconds, but it’s the florist who knows a customer orders peonies every spring who makes that message land. That’s how a holiday shopper becomes someone you see all year.”
Customer retention remains a challenge
Despite growing adoption of AI and confidence in holiday sales, the report identified customer retention as an area where many small businesses lack a defined strategy.
Only 39 per cent of owners plan to send follow-up emails promoting offers in the new year, while almost 34 per cent intend to introduce new products in January and February.
Meanwhile, 53.4 per cent of businesses surveyed said more than one-quarter of their holiday customers are repeat buyers, suggesting an existing customer base that could be encouraged to return through continued marketing.
However, 22 per cent of small businesses said they have no plan for maintaining customer engagement after the holidays, and more than 70 per cent are not planning to invite shoppers to join their email lists or loyalty programs.
The report identifies the lack of follow-up planning as a potential missed opportunity, particularly as businesses prepare to attract consumers who may be shopping with them for the first time.
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