Retail Crisis Looms: Lost Revenues Hit New Record & Expectations Are Low For Small Business Saturday

DATA INSIGHTS | TREND TRACKER | RETAILERS STRUGGLING -- Boston, MA, November 22, 2023 -- Alignable’s Main Street Merchant Report shows that 56% of independent merchants who plan to participate in Small Business Saturday on November 25th anticipate they’ll make half or less this year compared to what they generated last year. 

Beyond that, because of these dreary expectations, only 20% of all B2C small business owners polled have even committed to participating in Small Business Saturday this year. 

While another 28% are still undecided, a whopping 52% have said the annual shopping tradition has lost some of its original luster, because it rarely results in a revenue boost. 

Many who are opting out of Small Business Saturday say that the proliferation of deals being offered by national chains -- declaring Black Friday discounts a month before Black Friday actually arrives -- are diminishing the importance of special shopping days.

These statistics from Alignable's Main Street Merchant Report are based on responses from 2,833 randomly selected small business owners polled from 11/2/23 to 11/20/23, along with historical input from another 23,000+ past survey participants. 

Meanwhile, Revenue Losses Have Reached A New High

While these projections are discouraging, they're building upon a revenue roller coaster ride these merchants have been on for at least six months, fueled by a daunting economic landscape of still-high interest rates, cumulative inflation, rising labor costs, and more. 

Revenue losses for small retailers have just reached a six-month high this month with 49% saying they're making half or less than they did monthly prior to COVID. 

This figure also represents the biggest surge in monthly revenue losses this year, up seven percentage points from October, when 42% said their revenues were on the decline. The chart below illustrates the situation on Main Streets across the U.S. right now.

Given this environment, it's more important than ever that consumers spend more on Main Street for the rest of Q4 -- not just during Small Business Saturday or Black Friday, but as often as possible.

Sounding The Alarm: Major Shift In Spending Is Needed

Worried about the health of many local businesses, SMB advocates are calling for a shift away from online shopping at major national companies or big box stores, imploring consumers to come back to local merchants and spend much more with them. 

Here's just some of their reasoning: for each dollar spent with a locally owned merchant, 66% will stay in the local community, while only 1% of each purchase made with a national outlet will be reinvested in the local community. 

Ultimately, if this shift doesn't happen, the quality of life in small towns could be in jeopardy as more empty storefronts appear on Main Streets, giving them the look of ghost towns instead of prime destinations for local economic prosperity. 

And as more stores close, the local tax base could decline, affecting overall property values and town or city services.  It's a spiral every town would want to avoid if at all possible and it starts with consumers ramping up their support of local merchants. 

Consumer Spending Should Be Up, But It's Down In Q4!

Reinforcing this call to action, local retailers say consumer spending at their establishments is on the decline at a time of year when it should be stronger. 

In fact, the percentage of shop owners noting consumer spending declines skyrocketed from October to November -- up 10 percentage points -- as 49% of retailers reported reduced spending vs. just 39% last month. That's the steepest jump in at least six months.

Here's a snapshot of consumer spending trends on Main Street.

Considering these economic issues, one would think that retailers would be counting more on traditionally big shopping days like Small Business Saturday to help them turn things around. 

But the opposite is true this year, based on the past performance of other Small Business Saturdays and how much retailers are struggling now with consumer spending, high interest rates, and cumulative inflation.

Startling Drop In Interest From '22 To '23

In 2022, nearly 75% of Main Street merchants participated in Small Business Saturday based on Alignable's polling at the time, though 52% were disappointed by the revenues they earned. 

But as we stated above, only 20% of small, B2C companies are fully committed to participating in Small Business Saturday this year, though another 28% could hop on board at the last minute.

The current dip in projected participation rates -- from 75% in 2022 to a mere 20% in 2023 -- is monumental by anyone's standards -- down 55 percentage points. But, perhaps, it will not be quite as dramatic by the time Saturday rolls around. We'll check afterwards to see what transpired.

Silver Lining: 47% Of Restaurant Owners Will Participate

While this decline is depressing, there is one positive development -- nearly half (47%) of restaurant owners still want to be involved and expressed confidence that it could help drive business for them. 

Right behind them, you have 29% of transportation services committed to the special shopping event, along with 26% of general retailers.

Meanwhile, only 19% of gyms, 18% of salons or barber shops, and 16% of those in the automotive industry have committed to be part of Small Business Saturday.

Any Differences Among States? And How About Canada?

First off, the situation in Canada is even more pronounced, as a whopping 59% of Main Street merchants polled there said they're not interested in being part of Small Business Saturday -- seven percentage points higher than their U.S.-based peers. 

In terms of key states, here's a quick look at some of the states:

• New Jersey leads the pack in terms of those bypassing Small Business Saturday. Some 68% of SMB owners there told us it's a no-go, while 17% said they will, indeed, participate. 
• Right behind New Jersey, 65% of New York-based merchants aren't getting involved, while 16% said they would.
• For MA & OH, 61% won't be part of it, while 8% will (for both states).
• For FL, 54% said no to Small Business Saturday, while 10% said yes.
• In TX, there were more extreme views. While 53% are opting out of Small Business Saturday, 25% are on board and looking forward to it.
• In CA, 51% said no, and 8% said yes, leaving 41% undecided.
• In CO, 50% are not participating, while a relatively impressive 35% said they're definitely getting involved in Small Business Saturday. (CO-based businesses are the most enthusiastic across the nation). 
• In IL, only 44% said they're not participating, while 25% are, leaving 31% undecided. 
• In NC, only 39% are opting out of Small Business Saturday, while 11% are committed to it, leaving another 50% undecided.
• Finally, only 35% of PA-based SMBs are not getting involved, while 30% are enthusiastic about it.

To see more detailed findings from Alignable's Small Retailer Report covering other states, provinces, or demographic groups, please contact me at chuck@alignable.com.

To review past poll results, go here or to the Alignable Research Center.

About The Alignable Research Center

Alignable is the largest online referral network for small businesses with 8 million+ members across North America.

We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.