These big chains are driving small retailers out of business


Many Americans shop for small Saturdays to support clothing, toys, furniture, sporting goods, hardware, and electronics stores. But this year’s Small Business Saturday promotion is unlikely to change the fortunes of independent businesses in America, which have grown dramatically apart from their bigger rivals. Related Video Above: Some Americans Skip Black Friday For Small Business Saturday This Year Small retailers have been displaced during the pandemic and are at a disadvantage in dealing with the current supply chain crisis, rising inflation and labor shortages. said retail analysts and supply chain experts. First, with the spread of COVID-19 last year, many small businesses did not qualify for “essential” businesses and were forced to close. Your bigger competitors like Walmart, Target, Costco, Home Depot and others could stay open. With smaller retailers closed and spending on travel and leisure stalled, these big chains boomed as Americans stocked up on groceries, household items, and office supplies and furniture during the stay-at-home mandates. Meanwhile, the pandemic resulted in around 200,000 more small businesses closing in the first year of the pandemic than in a typical year, the Federal Reserve estimated. As independent stores reopened in the second half of 2020 and early 2021, they faced new challenges: production downtimes and material shortages that made it harder to source and keep products in stock, higher costs for shipping and transportation, and difficulties with setting and binding All retailers have been grappling with these issues this year. But the challenges have hit independent businesses harder, experts say. Mom-and-dad owners tend to be lowest on the priority lists for manufacturers and shipping companies when bottlenecks or delays arise. Home Depot, for example, said last week that some of the chain’s sellers with limited supplies said they gave the company priority over others: “We can’t serve the industry, so we prefer to focus on the best partner,” said the suppliers, recalled On a phone call with analysts last week, Home Depot Chief Operating Officer Edward Decker found the financial flexibility to handle higher costs and keep prices down for customers as opposed to large competitors who can leverage their size and extensive resources to absorb cost increases without the muscle, “said Michael Baker, retail analyst at DA Davidson, in a customer note last week. The gap between large and small retailersSales are expected to boom this holiday, but small stores may fall short since the buyers go to cheaper chains with more goods on their shelves. Retail sales wi rd in November and December, compared to Christmas 2020, will rise between 8.5% and 10.5% this year to a record of up to 859 billion US dollars, projects the National Retail Federation, an industrial trade group. Large chain inventories spiked ahead of the holidays, thanks in part to tactics that are far too costly for most shopkeepers – chartering ships and overseas air freight products to the United States, for example. Large retailers also rely on their broad supplier network to mitigate raw material shortages and factory closures. Small stores typically only have a handful of suppliers. So if anything goes wrong with any of them, they are stuck. The target is “well positioned” for important Christmas products like toys and gifts, said retail giant’s chief operating officer John Mulligan on a phone call last week. This will help Target “continue to gain market share over the holiday season”. Retail giants are pulling out all the stops this holiday season to store goods, keep prices low for customers, and occupy shops and warehouses. Independent businesses are struggling to keep up, however. According to a recent survey by the National Federation of Independent Business, a small business lobby group, 39% of small business owners said in October that supply chain disruptions have a significant impact on their business. Another 29% reported moderate effects. Only 10% reported no impact from supply chain interruptions. “Small business owners are trying to capitalize on current economic growth but remain pessimistic about business conditions in the near future,” NFIB chief economist Bill Dunkelberg said in a statement. The shortage of manpower for vacancies and inventory shortages are some of the biggest challenges for small businesses, said he and will “continue to be a problem during the Christmas season”. between America’s largest and its smallest businesses will have stretched even further.

Many Americans do small-scale shopping on Saturdays to support clothing, toys, furniture, sporting goods, hardware, and electronics stores.

But this year’s Small Business Saturday promotion is unlikely to change the fortunes of independent businesses in America that have deviated dramatically from their larger competitors.

Similar video above: Some Americans skip Black Friday for small business Saturday this year

Small retailers were displaced during the pandemic and are severely disadvantaged in the face of the current supply chain crisis, rising inflation and labor shortages, retail analysts and supply chain experts said.

First, when COVID-19 spread last year, many small stores did not qualify as “essential” stores and were forced to close. Your bigger competitors like Walmart, Target, Costco, Home Depot and others could stay open.

With smaller retailers closed and spending on travel and leisure idle, these big chains boomed as Americans stocked up on groceries, housewares, office supplies, and furniture while staying at home.

Meanwhile, the pandemic resulted in around 200,000 more small businesses closing in the first year of the pandemic than in a typical year, according to the Federal Reserve estimated.

When independent stores reopened in the second half of 2020 and early 2021, they faced a number of new challenges: production downtimes and material shortages that made it harder to source and keep products in stock, and higher costs for shipping and transportation such as difficulties in hiring and retaining workers.

All retailers have grappled with these issues this year. But the challenges have hit independent businesses harder, experts say. Mom-and-pop owners tend to be lowest on the priority lists for manufacturers and shipping companies when bottlenecks or delays arise.

For example, Home Depot said last week that some vendors with limited supplies in the chain said they are prioritizing the company over others: “We can’t serve the industry, so let’s focus on the best partner.” The suppliers said Home Depot chief operating officer Edward Decker recalled a call with analysts last week.

Small businesses also tend to lack the financial flexibility to handle higher costs and keep prices down for customers, unlike large competitors who can use their size and extensive resources to absorb cost increases. “

Larger retailers should be better able to handle supply chain problems and have better inventory than smaller retailers without the muscle, ”said Michael Baker, retail analyst at DA Davidson, in a statement to customers last week.

The gap between large and small retailers

Sales are expected to boom this holiday, but small stores could run short as shoppers head to cheaper chains with more goods on their shelves.

Retail sales in November and December this year will grow between 8.5% and 10.5% compared to the 2020 holiday season, to a record of up to $ 859 billion, predicts the National Retail Federation, an industrial trade group.

Large chain inventories spiked ahead of the holidays, in part due to tactics that are far too costly for most shopkeepers – for example, chartering ships and overseas air freight products to the US. Large retailers also rely on their broad supplier network to mitigate raw material shortages and factory closures. Small stores usually only have a handful of suppliers. So if anything goes wrong with any of them, they are stuck.

Target is “well positioned” for important Christmas products like toys and gifts, said John Mulligan, chief operating officer of the retail giant, on a conference call last week. This will help Target “continue to gain market share over the holiday season”.

Retail giants are pulling out all the stops this holiday season to store goods, keep prices low for customers, and occupy stores and warehouses. But independent businesses are struggling to keep up.

According to a recent survey by the National Federation of Independent Business, a small business lobby group, 39% of small business owners in October said supply chain disruptions had a significant impact on their business. Another 29% reported moderate effects. Only 10% said they had no impact from supply chain interruptions. “

Small business owners are trying to benefit from current economic growth but remain pessimistic about business conditions in the near future, “NFIB chief economist Bill Dunkelberg said in a statement.

The shortage of manpower for vacancies and inventory shortages are some of the biggest challenges small businesses face, he said, and will “continue to be a problem over the Christmas season”.

It all means that by the end of the holidays, the gap between America’s largest and its smallest businesses is likely to widen even further.


Comments are closed.