When Marion McFeely makes a batch of caramel pecan turtles at her shop in Greensburg, she’s aware of the pain in her pocketbook as well as the sweet delight her customers will experience.

Like many small retailers heading into the critical holiday shopping season, she’s feeling the pinch of inflation at her McFeely’s Gourmet Chocolate, which opened 10 years ago and has a second location in Irwin.

“This year has really put a hurt on us, between the chocolate, the caramel and the nuts — everything,” she said. “It’s just scary.”

Despite concerns about inflation, consumer spending on a national level is expected to increase this holiday season.

The National Retail Federation has forecast that spending during November and December will grow between 3% and 4%, compared to the same time last year, reaching a record $957.3 billion to $966.6 billion. That’s consistent with the average annual holiday spending increase of 3.6% from 2010 to 2019.

Meanwhile, the cost of chocolate has gone up about 35% in the past year, McFeely said. To purchase a box of the name-brand sandwich cookies she dips in chocolate for her customers, she now pays $12 — compared to the $8 it previously cost for a package that was 20% larger.

“It’s been a rough year,” she said. “I’m trying not to raise my prices because we’re a luxury item, and people need to feed their families.”

Still, as she plans for next year, McFeely said, “I’m definitely going to have to regroup and reevaluate our pricing.”

McFeely has been taking steps to grow her sales throughout the year, including adding hand-dipped ice cream and fresh-baked pastries to her offerings.

But that doesn’t take away from the importance of her fourth-quarter sales, which she said can contribute nearly a third of her annual revenue.

“We know this last quarter is where we have to pull it all together,” McFeely said. “Whatever we make has to carry us for the first three months of next year.”

Drop in orders

Rising household costs may be among the factors that have taken a large bite out of holiday orders for treats from the Sweet Alchemy vegan bake shop in New Kensington.

“Normally, we do really well in the last quarter of the year,” said owner Jamie Parker. “We get orders for Thanksgiving and Christmas and cookie trays.

“This year, our orders are down by about 50%. That’s a significant decrease.”

Parker speculated that some potential customers may have less disposable income because of rising utility costs and the end of the pause on student loan repayments that was triggered by the covid-19 pandemic.

“In the food service industry, your profit margins are minimal, and we’re not a necessity,” she said.

While prices for ingredients including flour have gone up, Parker said she has been able to offset some of those expenses by finding alternative suppliers. She’s also invested her own labor in making baked goods from scratch instead of spending more to buy prepared dough.

“It makes more sense,” she said. “I’m very fast in the kitchen.”

Of more concern, she said, has been increasing prices of packaging for her food items. Plastic containers that used to cost 10 cents each are now 50 cents.

Working in concert with other small entrepreneurs has been important to the sustainability and growth of Parker’s business, which has expanded twice since she began making baked goods in her home in 2016. She now occupies a 1,000-square-foot space on Fifth Avenue that allows her to provide meals for dine-in service and to lead cooking lessons.

As for collaborative efforts, she’s supplying pretzels for a nearby brewery, has organized an area bakery crawl and is taking part in an upcoming Merry Market event with other vegan vendors.

“It’s better when we work with other people,” Parker said. “We can bring more of a crowd when we offer different things.”

‘Christmas season is everything’

Having operated in Hempfield’s Westmoreland Mall for more than 30 years, Country House Furnishings by Barbara Ann’s has built a following among customers for its home decor and handmade pine furniture. But, owner Amy McKnight said: “You never want to take that for granted. It’s good to see new people at Christmas, too.

“Anybody in retail would tell you that the Christmas season is everything, especially to a small business. This is when more people are going to be out in the mall.”

McKnight said she likely will be able to judge by the Monday after Thanksgiving how well the store will perform this season.

“You only have seven weeks that you’re looking at” for holiday sales, she said.

McKnight was a buyer for the store before she reopened it after the 2019 death of Barbara Ann Day, her mother and the founder of the business.

Increasing prices charged by merchandise suppliers, primarily because of transportation costs, affected the store more last year than it has this season, according to McKnight.

“We’ve seen price increases as much as 50%,” she said. “We’ve tried to not pass all that on. We’ve absorbed as much as we possibly can.”

McKnight said she sources as much of her merchandise as possible from the United States, preferably Pennsylvania, with the resulting higher labor costs balanced against the shipping expenses that would be involved in importing products.

Even more important, she said, is “that handmade touch” she can obtain when dealing with area artisans.

An exception is a line of sturdy, hand-painted pottery she purchases directly from a factory in Poland.

“Because of the war in Ukraine, they had a lot of increases in gas and manufacturing prices they had to deal with,” she said.

A little over a month from now, while others are packing up their ornaments and making New Year’s resolutions, McKnight said, she’ll be ordering merchandise to sell during the 2024 holiday season.

“We prepare for Christmas pretty much all year,” she said.

Home-grown business

A similar schedule applies at the Holiday Home Store, a nearly 30-year-old Ligonier business that operates throughout the year, selling ornaments and other decor for a succession of festive occasions.

Owners Pat and Tom Baker attend an industry show in Atlanta each January to get ideas for the items they’ll order and then sell in their store as the year unfolds.

“For us, it’s hard to compete with the bigger box stores,” Pat said. “We try to look for things for our store that are more unique.”

The business grew from the couple’s interest in collecting glass ornaments, which are a mainstay among the product lines they offer at their store.

“To be able to sell something, you have to know what you’re talking about,” Pat said.

She said the store has contended with increased prices for some of the merchandise it carries — including added transportation fees, which many suppliers since have removed.

“You try to hold the line on what you have to pass on to customers,” she said of the costs. “You try to find a balance where you’re not overpricing things so that people aren’t going to buy them. We try to have price points for everybody across the board.”

Fourth-quarter sales can account for more than half of the store’s annual revenue, according to Baker, with Christmas-themed merchandise ringing up the most sales. “Halloween is right behind it,” she said.

“We always hope for a good, strong holiday season,” she said. “It’s always a nail-biting time of the year with a lot of bills that come due.”

The Bakers long have operated an eBay store. Since sales through that platform require more time spent packaging orders for shipment, they aren’t upset that they now represent about 40% of their business, compared to a previous even split between online and in-store purchases.

“We don’t want to have to kill ourselves at Christmastime,” Pat said. “We want to spend more time with our grandchildren.”

Tight labor market

In the tight labor market that has prevailed in the wake of the pandemic, many small businesses have found it difficult to fill job openings, and the Holiday Home Store is no exception.

“We’ve been short-handed and challenged every year since covid started,” Pat said, even though the store has increased the wages it is offering. “We finally took down our ‘help wanted’ sign.”

This holiday season, she said, they’re anticipating the part-time return of a student on break from college to supplement their own efforts, those of one longtime employee and a family member who manages the store.

The Bakers — who perform archaeological consulting work in a separate venture — may call in their children for reserve duty at the store, when they’re available.

McFeely has not been able to increase the wages she pays her workers, but she has found other approaches have succeeded in keeping her two stores staffed.

She pulls in her two adult children to help, as needed, assisting a half dozen regular employees.

Those employees include some retired former colleagues she met in her previous career as an X-ray technician.

“These are older people who are looking for a part-time job and don’t want to work nights or weekends,” McFeely said.

McFeely has been able to find high school students to help at her Irwin store. Unlike the Greensburg location, it has extended evening hours.

The teen workers are able to supplement their paycheck with tips from customers and can get some homework done when there is a lull in business, McFeely said.

One former teen worker attended culinary school and has returned to help McFeely in Greensburg, incorporating pastries into the business’s offerings while developing its social media presence.

“We’ve been very blessed,” McFeely said. “We’ve been able to build up a nice clientele.”