Rent delinquency among smaller retailers took a turn for the worse in October, with 43% saying they couldn't cover their October rent in full this month, up 12 percentage points from last month, according to a report from small business referral network Alignable.
That figure approaches the highest rent delinquency of the year so far; in July 44% couldn’t cover rent, per the report.
In general, 59% of small business owners reported that customers are spending less this month compared to September, Alignable said.
Consumers are tightening their belts as small retailers face rising costs of their own.
Just over half of small business owners say rent was harder to pay in October because it was higher. Supply chain costs, increasing labor costs and difficulty hiring were also factors, Alignable said.
The situation makes the holidays even more important than usual this year for many of these stores.
Smaller shops are already at a disadvantage against major players with deeper pockets. Retail giants like Walmart, Target and Amazon didn’t even wait for Halloween to launch what many see as one of the earliest launches of Black Friday ever, so small retailers’ competition is all the more formidable already. Three quarters of holiday shoppers say they’ll be looking for holiday items at general merchandise retailers, according to research from business app developer IronSource.
But some shoppers will prioritize their local shops, with 40% saying they’ll head to their own downtowns for holiday shopping, IronSource also found. Gen X consumers are the most likely to think of independent stores for the holidays, per that report.
Correction: A previous version of this article misstated the month-over-month increase in the rent delinquency rate among small retailers. The October rate was up by 12 percentage points over September.