Survey reports momentum for independent businesses

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As independent businesses fight for their place against chain stores and Internet giants, there may be some significant push-back against the big guys. A new survey shows many independents are doing well and even better than their bigger competitors in several areas, including 2015 sales growth.

The Independent Business Survey, conducted annually by the Institute for Local Self-Reliance and Advocates for Independent Business, gathered data from over 3,200 independent businesses reporting solid sales in 2015, with revenue growing an average of 6.6 percent. Among independent retailers, revenue increased 4.7 percent in 2015, including a 3.1 percent gain during the holiday season.

These figures are significantly better than that of many national retail chains. Overall holiday retail sales rose just 1.6 percent in December according to the U.S. Department of Commerce.

Overall employment at the independent businesses surveyed expanded by 5.6 percent in 2015, with more than 30 percent of respondents reporting the addition of at least one employee.

Local First initiatives are also making a difference, the survey found. Two-thirds of respondents in cities with an active Local First, or “buy local,” campaign said that the initiative is having a noticeable positive impact on their businesses.

Competition from large internet companies is a top challenge, particularly for independent retailers, and 70 percent ranked it as very significant to their business. Another obstacle is the fact that large competitors market power to secure better pricing and terms from suppliers. The rising cost of commercial rent is another difficulty, with 59 percent of retailers reporting being worried about the increasing cost of rent. The steep swipe fees set by credit card companies are also a challenge. A large majority of retailers favored government action to cap credit card swipe fees, as the E.U., Australia, and other countries have done.

Among the respondents were 115 bicycle retailers. Among bike shops:

  • 58 percent said their revenues were up in 2015, with 2.5% average growth.
  • Only 41 percent said their holiday sales were up, with average growth of 1.1%.
  • While only 37 percent said they had Local First campaign in their cities, a majority of 73% said they feel public awareness of the benefits of supporting locally owned businesses is growing or staying stable in their markets.
  • 87 percent of bike shops said competition from Internet retailers is a “4 or 5” on a scale of 1 to 5 of importance.
  • Other issues were health insurance costs (60% rated it a 4 or 5), difficulty in finding qualified employees (52%), competitors receiving better pricing and terms (33%) and competition from larger brick-and-mortar chains (33%).

“While the survey shows a number of positive trends for small businesses, especially the impact of buy local programs, independent retailers are under more financial pressure than ever before, due to increasingly thin margins,” said Todd Grant, president of the NBDA. “In light of the significant value these local entrepreneurs bring to both their communities and their industries, we believe they need an opportunity to compete and that suppliers in particular need to step up to ensure pricing parity across channels.”

More on the survey is available from the ILSR website: https://ilsr.org/2016-independent-business-survey/

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