The past two years have been a struggle for local businesses with COVID-19 lockdowns and inflation. This holiday season may continue to be tough.
“I'm seeing, like, banking and tax starting to tighten their policies. That's going to ripple down to us,” said Mackenzi Farquer, owner of retail chain and lifestyle brand Lockwood. “Soon we're going to hear people who work in these sectors come in and say they've been laid off from their job. That will affect our sales.”
Already, Farquer has had to drop some of her best selling items because she felt she couldn’t pass the prices increases along to customers. Still, her expenses are rising and sales are lower than in 2021. With six stores in the New York area and 45 employees, everyone at Lockwood will feel the impact.
“The cost of wages, our paper bags, our day-to-day items, our energy supply: Everything is definitely more expensive,” she said.
There were 32.5 million small businesses according to the U.S. Small Business Administration, defined as companies with fewer than 500 employes. Their impact is widespread: American Express estimates they create $5 trillion in economic impact.
Supporting Small Businesses
If every millennial and Gen Zer in America spent $10 on a neighborhood buisness, it would add $2 billion in local economic value, according to the recent American Express Economic Impact Survey. The majority of that money supports local communties, with 68 cents of every $1 purchased staying in the area.
“Shopping small is the lifeblood of every community,” Farquer explained. “We are the people that you will see when you walk your dog, when you take your kid to school. The money that I spent in my store stays in this community.”
Amex founded Small Business Saturday in 2010, as a response to the Great Recession, to encourage people to patronize these businesses. It has since turned into a global movement. This year is more important than ever with seven out of 10 local businesses concerned about inflation impacting their businesses, said Marianne Rauch, American Express vice president of Small Business Saturday and Shop Small.
“Now as we emerge from the depths of the pandemic, [small businesses] are continuing to face some new macroeconomic challenges and also have to continue to compete with larger businesses, who may have access to more resources or technical know-how than small business owners might have,” she pointed out.
About 72 percent of consumers said they are sticking to a budget this holiday season and 66 percent are planning on scaling back their holiday shopping, according to the American Express survey.
“We are definitely finding that both consumers and small businesses are feeling the inflationary pressure that's happening right now,” Rauch said.
Shopping Small Online
Shopping Small Online
Shopping small doesn’t only mean local brick-and-mortar stores; it can include companies that sell on big platforms. In 2021, total sales of U.S. sellers in Amazon’s stores reached $2 billion, according to the e-commerce giant. Over half of items sold on the platform are from independent sellers, most of which are small to mid-sized companies. During the holiday season in particular, U.S.-based third-party sellers sold an average of 11,500 products per minute between Black Friday and Christmas.
Allergy-friendly baked goods and mixes company Partake Foods does a mix of physical sales in stores as well as online sales. CEO Denise Woodard started the company after becoming frustrated while trying to find safe items for her daughter who suffered from food allergies.
At the end of 2019, Partake Foods was in about 350 stores with a small presence online. By the end of end of 2020, it was in over 5,000 stores around the country and Amazon sales had expanded significantly, said Woodard. The company has seen more than 300 percent year-to-date growth on Amazon.
“With the current macroeconomic climate, we haven't necessarily seen an impact on sales,” she said. “We know that a lot of our consumers need our product because we're bringing an allergy friendly product to market and we've worked really hard to make an accessible product.”
However, it has had to increase prices for the first time since the company was founded in 2016.
“It was inflationary,” Woodard explained. “We've seen over 50 percent cost-of-goods increases on some of our ingredients.”
The Manhattan-based company employees just 18 people, though workers are allowed to do their jobs remotely.
“I wanted to ensure that we could get the best talent on board, location agnostic. As a working mom, I knew that flexibility was really important to me, and I saw the same across our all female leadership team,” said Woodard. “I wanted to be able to give employees a healthy workplace where they could be their best selves personally and professionally.”
It’s important to shop small because you are support those around you, she points out.
“Every dollar that comes into our business, we're investing in our team which is primarily women and people of color,” Woodard explained. “We have really strong social mission efforts. We’re donating a million meals to food insecure families this year, and have helped nearly 20 [students from historically Black colleges and universities] find jobs in the food industry in an effort to increase diversity. As consumers support small businesses, they're able to have an even bigger positive impact on the communities they operate in.”