Small Businesses Show Weak Improvement in Sales
In earlier posts, I’ve lamented the sad plight of small retailers. They were hurt far more than their larger competitors by the recession and its aftermath, being unable to match large retailers’ aggressive pricing and discounting tactics. So, it was with relief that I noted some improvement in small retailers’ share of the online marketplace over the most recent three quarters:
However, it’s important to put this positive trend in perspective and realize that small retailers’ 33.6% share in Q2 2011 is still well below their 37.2% share back in Q4 2009. This depressing statistic points to continued weak consumer demand due to high unemployment and concerns about the country’s economic future.
In fact, the National Federation of Independent Business (NFIB) recently reported that its Small Business Optimism Index declined in July for the fifth consecutive month:
Fifth Consecutive Month of Decline
"For the fifth consecutive month, NFIB’s monthly Small-Business Optimism Index fell, dropping 0.9 points in July—a larger decline than in each of the previous three months—and bringing the Index down to a disappointing 89.9. This is below the average Index reading of 90.2 for the last two-year recovery period. Expectations for future real sales growth and improved business conditions were the major contributors to the decline in optimism."
In recent comments, Bill Dunkelberg, the NFIB Chief Economist, sounded particularly bitter:
“Given the current political climate, the protracted debate over how to handle the nation’s debt and spending, and the now this latest development of the debt downgrade, expectations for growth are low and uncertainty is great. At the two year anniversary of the expansion, the Index is only 3.4 points higher than it was in July 2009. And considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course. Perhaps we might begin referring to the 'Small-Business Pessimism Index' from now on."
Consistent with Comscore’s observations in e-commerce, the NFIB reported that the percent of owners citing poor sales as their top problem—the long-time primary complaint of firms—has faded a few points, and reports of sales trends are much better than a few months ago. However, the July survey anticipates slow growth for the remainder of the year, high unemployment rates, inflation rates that are too high and little progress on job creation.
As a result, it appears that we cannot look to small businesses with any degree of confidence that they will help in the near term creation of the jobs necessary to quickly get us out of the unemployment quagmire in which the country now finds itself:
