Dive Brief:
- Nearly half of small business owners, including 59% of retailers, say they’re at risk of shutting down by the fall, up 12% from the 35% that were in that predicament a year ago, according to research from Alignable, an online referral network for small businesses.
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Half of small retailers are cutting back on orders for the all-important holiday quarter, with 38% of those businesses saying they’re reducing orders by more than 20% compared to last year, per the report.
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Owners cite a host of reasons, including inflation, higher interest rates, gas prices, rent hikes, supply chain disruptions, lower consumer spending, fears of a recession and losses left over from 2020 and 2021.
Dive Insight:
Consumers’ current quandary — getting less for their money even as they shell out more — isn’t helping small, independent retailers.
Retailers are among the industries where a great majority of small business owners say that inflation is hurting business more than the pandemic did, Alignable said. Many consumers have gone from enjoying some support from the federal government to help them grapple with the pandemic’s challenges, to being left to handle price spikes on their own.
The holidays will be coming too late for any store that closes its doors in the fall, but many others aren’t counting on the usually lucrative period this year, either. While large retail chains are likely well along their process of putting in orders in preparation for the holidays, smaller retailers are moving defensively, putting in fewer orders to avoid losses.
The prospects are even more grim for minority-owned businesses (52% could close by fall) and women-owned businesses (53%). And things are especially dire for small retailers and others doing business in Colorado, Michigan, Ohio, Pennsylvania, Texas, North Carolina, California, Illinois, Florida, New York, New Jersey and Georgia, Alignable said.
Further, another Alignable report found that 35% of small businesses in June couldn't pay rent in full or on time, up 9% from January.
