September 20, 2014

5 Small Retail Industries Suffering This Holiday Season

The year 2008 is turning out to be a tough one for small florist businesses. Sales are down nearly 15%.

The average florist is losing money this year, with average net profit margins of -3.27% in 2008. 

Florists are not the only ones hurting.

Sageworks Inc., which provides an analysis platform for financial professionals, sent me some interesting information about small retail businesses with less than $10 Million in annual sales. The firm, out of Raleigh, North Carolina, aggregates private company financial data in real time from the thousands of CPA firms that use Sageworks’ financial analysis technology.

Sageworks identified 4 other industries where the small businesses are declining or not growing as fast, and could really use support by consumers, including:

  • Clothing Stores – sales are down an average 0.44%.
  • Home Centers & Hardware Stores – down an average 3.75% so far this year.
  • Beer, Wine, and Liquor Stores – saw average sales growth of 2.05%, compared to 5.30% in 2007.
  • Specialty Food Stores –while still growing, with a 6.98% increase in sales thus far in 2008, that is down from the 7.94% increase last year.

Here’s a chart showing the situation in living color, prepared by Sageworks Inc.:

In case you can’t read the chart very well, the red line is florists.  Green is the hardware stores and home centers.  Yellow is beer, wine and liquor stores.  Pink is clothing stores.  Blue is specialty food stores.

Sounds like these small retailers could use your support.  As you are doing your holiday shopping, look for  small retailers in your local communities.  Frequent them.  You just might be helping save a small business like yours.

18 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

18 Reactions

  1. Luckily, those are all the types of establishments I enjoy visting frequently. Unfortunately luxury items like flowers, specialty foods, and liquor are the first to be cut when one’s budget is tight.

    Thanks for bringing this to our attention. I’ll definitely try to visit more local stores for my holiday shopping this season.

  2. Interesting post Anita. Perhaps Shane could weight in on inelastic demand principles.

    “Spirits” retailers are a no-brainer.

  3. This post just goes to show you how important it is to support your local small businesses. Not only are you helping them survive, but generally they are a lot less crowded than big box retailers. To me that’s incentive enough especially around the holidays.

  4. Trying to see it from the bright side… At least you don’t have a VAT of 25% as in Sweden.

  5. Martin, VAT equals socializm. USA means balls to the wall…take no prisoners.

  6. Neal O’Sullivan,

    You are right. I have written about this in my post, Tax on Tax on Tax… Click on “Martin Lindeskog” Says: if you want to read it.

  7. Seems I may be doing my part to help without even realizing it . . . just purchased some new clothing this weekend from a small retailer and a water pipe in my basement burst today – so I’ll be heading to the hardware store now too :-)

  8. I’m from Western Canada. Just saw a report on liquor sales on the news last night; they are up, way up over here. It appears that some people are trying to ‘drown their sorrows’.

  9. Luxury goods always go first. I expect that home centers and hardware stores are up since people are doing the projects themselves and not hiring out. Great post, thanks

  10. You would think that liquor sales would be on this rise – especially this time of year. Holiday season, broke = d-r-i-n-k.

  11. Oh I love flowers Anita. I feel sad that they are quite ‘suffering’- I aplogize for the term – in this down times of the economy.

    But honestly, it isn’t a wonder for them to be really affected because all of us right now are really tight on budget and whether they’ll like it or not, the industry to where these florists belong is a business that people can obviously live without.

  12. Hi Anita,
    This is a profound post and one that should not be that hard to achieve. Buying local is easy if we put our minds to it. I do not have the usual complaints leveled at the big box stores; I frequent a few of them, but it is pretty do-able to just go to the local stores. You don’t have to do your “costco” run at the little store, but go buy a few things. I think the reminder should be that if you are going to spend some dollars, diversify your spending.

    I went and bought my son a Lego(tm) at the local toy shop rather than a big box for just this reason. He likes the store, so do I, and the couple of extra bucks is not going to crush me. Well, maybe it will and i’ll be eating plain rice and beans for a while. Oh well, a small price to pay for doing our part. Toys was not on your list, though… Hmmm.

    As for flowers, my wife’s birthday is coming up…
    Thanks for the reminders (not about her BD), but about thinking about our fellow small biz owners.
    TJ

  13. Sympathy for the “small business owner” is misplaced emotion. If the SBO is uncompetitive, then he/she perishes.
    It is incumbent on any business to achieve economies of scale. If they cannot, then fold. CostCo et al is not the villain.

  14. Actually, I am a little surprised that “spirits” sales are down in bad times. I always thought that when times got bad, they drank more. Are sales down because they actually drink less, or are they just turning to less expensive choices? Or are they buying the alcohol products at supermarkets instead of the liquor stores?

    As for Neal’s comment that that a small business needs to achieve economies of scale or fold, I disagree. The local merchant is never going to achieve the economies of scale of a big box merchant, but some local merchants will survive. The ones that will survive will be the ones that provide value in a way that the big box stores cannot. In some cases, the “value” will be convenience, in others it will be service, in still others it will be ambiance and atmosphere. There are always going to be people who will pay more money for the right reason.

    The local merchants that can’t find and deliver that extra value will be in trouble, however, particularly when money is tight.

  15. Neal,

    Costco and other big box general stores are certainly villains. Can’t think of a better term.
    Costco gains economies of scale by cherry picking the best items that the 50 various small outfits in town carry.
    For simplicity sake, let’s talk Legos. Costco will carry the two most popular sets. A small toy store would carry a nice variety of 8 different Lego sets. However, Costco has a lower price on the two most popular sets, and the small store loses 60% of their Lego sales. Little store can’t stay in business. Now, there are only two Lego sets in town.
    One Costco / Walmart in town can put many different specialty stores out of business. Those little stores would have carried a large variety of products, even some local products. Once Costco / Walmart outprices small stores on the most popular items, entire industries wither away.
    It would be nice to think small stores can survive on selection and service, but being outpriced eventually kills the small store. Economies of scale are great, but they lead to tiny selections of products that only.

  16. Lynn,

    As you say, economy of scale and purchasing power are valid concepts. I would go to the small store and buy the Lego bricks if I get better service and have a greater buying experience. But you shouldn’t feel obliged to run around all over the town to get all your stuff. Stores like Walmart has an important function that you could get plenty of cheap stuff in one place. I don’t think you shouldn’t describe this company as a villain.

    As a side note, if you really want to have a special experience, take a trip to Denmark and buy Lego from the source! They have a special amusement park with Lego brick. :)

  17. Dear Neal & Martin,

    I just wanted to mention that the small guy or gal does not get a good discount if any on goods. They are usually not even offered overstock’s or closeouts because of the Costco’s & TJMaxx. But, remember, the small business owner’s are the ones who usually support the local fundraisers for your kids etc. Don’t even think of asking Costco or TJMaxx to do such a thing. Yet,the small business often participate in such an activity to watch people run to TJ’s for a deal.

    Everyone should take a moment to consider the ethical standards such companies abide by. Walmart can be dirt cheap because of using the cheapest materials and cheapest labor. Try to find something made in the USA there. TJMaxx swoops in on a cheap wholesale buy when they are desperate to get rid of the goods.

    Retail is a very competitive business. But, it has gotten out of control over the last 20 years. I drive down the main street of my town & remember when small retail use to thrive. Now I wonder if anyone will take the chance & open a business in the many vacant store fronts I see everyday. So, support your local small business. The big box stores don’t give a crap about you and your community.

  18. Small local businesses do need our support but they also need to step up and move into what’s going on now in order to engage their customers and meet them where they are.

    Experiential is that way to go in terms of marketing, and any business must think of the “END USER” and their needs as they seek sustainable profits through serving those needs in engaging ways.

    This conversation has further validated the creation of my business that does just that, support and grow local businesses.

    Thanks for the insight, it’s 2011 as I write this post and unfortunately things have gotten consistently worse for most businesses.

    Rick

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>



Compare your business to the industry - Try our new tool