The U.S. depends on small businesses. More than half the people in the country either own or work for a small business, and those companies create about two out of every three new jobs annually, according to the U.S. Small Business Administration.
In recent years, large chains started to take the lessons of independent companies and apply them at scale. The most impactful of those decisions may have been bringing down the square footage of brick-and-mortar locations. At the same time, independent retailers started to experiment with solutions that used to only be available to mass marketers or large national chains. For example, as technology improves and becomes more affordable, small businesses are able to deploy savvy payment solutions, delivery mechanisms and other operational improvements.
The pandemic has impacted the trajectory of small businesses, pressuring many of them and particularly squeezing stores that were deemed non-essential during periods of required closures early on in the crisis. Small retailers tried some of the same pivots their national competitors did in response — shifting where possible to e-commerce or piloting new delivery options — but the challenges of scale and competition that have always plagued those retailers haven't evaporated. And in many cases the ongoing uncertainty pinched small retailers further by disrupting cash flow, employment and normal business.
This trendline profiles small business leaders, delves into news impacting the space and explores several topics facing small retailers as disruptions from the pandemic, e-commerce and broader economic trends continue to bedevil operations.
A third of small retailers can't pay rent as financial struggles spike again
By: Ben Unglesbee• Published May 3, 2022
The financial and operational challenges posed by the pandemic have not been felt in equal measure by retailers. The largest companies with the deepest pockets have by and large fared better than their smaller counterparts.
Indeed, many of the largest retailers have enjoyed record sales and profits despite social distancing, supply chain bottlenecks and a host of other disruptions over the past two years.
The share of small retail businesses that couldn't make rent rose to 34% in April, up six percentage points from February, according to survey data from Alignable.
Those surveyed cited inflation, including gas price spikes, supply chain issues, labor shortages, reduced revenues and increasing rent. Of those small businesses surveyed by Alginable, 46% said their rent was higher than six months ago.
Trouble making rent varied from state to state. Across all industries, New Jersey, Illinois and Maryland had the largest share of small businesses that couldn't pay. Other states, including New York and Texas, saw improvement in businesses' ability to pay.
During the most difficult days of the pandemic for retailers, when stores were closed, or had opened but still suffered significant traffic and revenue declines, cash was critical to survival. Large retailers quite simply had more cash on hand from their business as well as easy access to cheap capital from the financial markets.
When demand surged before global supply chains had the chance to catch up, creating bottlenecks throughout the world, the largest players could absorb increased ocean freight rates and could pay to charter their own ships or shell out for air freight.
Walmart, for example, paid $400 million in unanticipated supply chain costs. That is more than the revenue of hundreds of small retailers combined. And yet the company still posted sales increases and healthy operating profits. Smaller players typically have less money and less leverage with suppliers and carriers than the largest retail chains do. Lost sales from out-of-stocks can then become a financial crisis for some.
Resounding rebounds of foot traffic and sales in 2021 have given landlords more leverage to raise rents. Tussles over leases are still driving some retailers out of their locations. According to Alignable survey data, 7% of small businesses said their landlords were planning to raise their rents soon.
Article top image credit: Daphne Howland/Retail Dive
Surging inflation compelling small businesses to raise prices
By: Jim Tyson• Published April 7, 2022
Two out of three (67%) small businesses have raised prices during the past 12 months and 85% are concerned about the persistence of the highest inflation in 40 years, according to a quarterly survey by the U.S. Chamber of Commerce and MetLife.
In an effort to adjust to rising prices, four out of 10 (41%) small businesses have cut staff during the past year, while 39% have taken out a loan, according to the survey. One in three small business owners (33%) rank inflation as their No. 1 challenge, a 10 percentage point jump compared with the survey from the previous quarter.
"Inflation is top of mind for small businesses as it continues to limit their purchasing power, forcing small businesses to raise their prices and absorb higher costs within already thin margins," according to Tom Sullivan, the U.S. Chamber's vice president for small business policy.
CFOs at companies of all sizes face increasing signs that high inflation is becoming entrenched, forcing a review of fundamental business planning including pricing, wages and capital allocation.
"Broad-based price increases have become normal across the economy," according to Neil Bradley, the chamber's chief policy officer and head of strategic advocacy. "Supply chain disruptions, energy prices and a persistent shortage of labor are all coming together at a time of sustained demand to force prices up."
The rising cost of inputs has prompted companies to pass on higher prices to consumers. The producer price index for final demand, a measure of what suppliers charge, soared 10% in February 2022 from the prior year as the pandemic continued to crimp supply chains in industries ranging from housing to technology to autos.
Meanwhile, the consumer price index in March rose at a 7.9% annual rate, the fastest pace in four decades, according to the Labor Department.
"Larger companies can often delay price increases even when their input costs increase through efficiencies and reductions in margin," Bradley said, adding that such forbearance is usually more difficult for smaller companies.
"What we are seeing right now is that the inflationary pressures are so great and so broad-based that companies are being forced to raise prices regardless of their size," Bradley said in an email response to questions.
In April, expectations for inflation one year in the future rose to the highest level since 1981, according to a University of Michigan survey of consumer sentiment. Consumers expect their finances to worsen during the coming year by the biggest proportion since the mid-1940s.
"Prevention of inflationary psychology is much less costly before it becomes ingrained in the economic behavior of consumers and firms," according to Richard Curtain, chief economist for the University of Michigan survey.
"Confidence that economic policies can resolve the [inflation] problem is essential," he said. "Unfortunately, half of all consumers unfavorably assess current policies, more than three times the 16% who rated them favorably."
Inflation will probably slow in coming months as pandemic-induced disruptions in supply chains clear up, Federal Reserve Chair Jerome Powell said at a March 16 press conference after a meeting of central bank policymakers.
Fed officials forecast that their preferred inflation measure — the core personal consumption expenditures price index — will decline to 4.1% by December from a 38-year high of 5.2% in January.
The Fed, citing price pressures, raised the federal funds rate on March 16 for the first time since 2018. It has set an inflation target of 2%.
The survey of small businesses underscores the magnitude of the inflation challenge, Bradley said. "The survey results confirm that inflation is broad-based, impacting every economic sector and is likely to persist much longer than originally anticipated."
Despite rising prices, small businesses said they are more confident about their outlook than at any time since the onset of the pandemic in early 2020, according to the survey.
"It is encouraging to see the steady rise in business confidence on Main Street, even as the latest survey was taken at the height of the omicron wave," Sullivan said. The survey of 750 small business owners and operators was conducted from Jan. 14 until Jan. 26, 2022.
Article top image credit: Matias Delacroix via Getty Images
Snapshot: Trends in small and medium retail businesses
Retailers are beginning to see relief from the pandemic’s devastating effects, but the impacts from COVID have forever changed the industry. Not only have they dramatically shifted their present operations, they’ve altered their long-term strategies and direction.
It’s clear that tomorrow’s industry will look much different than when we entered this crisis. In fact, data from a survey conducted by the Harris Poll in the fifth edition of our “Small and Medium Business Trends Report” shows that growing retailers that stepped up to meet the challenges are emerging stronger. We dove deep into the fifth edition of the report’s numbers to identify several industry trends. Let’s take a look.
Trend #1: Retailers see the value in CRM and technology.
Like most industries, retail saw an acceleration in technology use. Fifty-nine percent of these retail businesses now rely on a customer relationship management (CRM) platform for their businesses. Forty-three percent have added a CRM platform since the pandemic started, while the remaining 16% have had their CRM systems in place for two or more years.
Thirty-three percent have accelerated their investment in technology, particularly for sales, marketing, and customer service.
Why did your company accelerate its investments in technology?
Technology and digitization truly kept many of these companies afloat. In fact, 73% of these retail leaders agree that their businesses survived the pandemic because of digitization.
Trend #2: Trust and support are top of mind for retailers.
After two long years of pandemic living, customers and employees alike want relationships built on trust; they’re looking for safety, security, and transparency. Employees want to trust the companies they work for, while customers want to know they’re buying from a company that acts with integrity, provides prompt personalized service, and prioritizes customer health and safety.
Among the retail business leaders we surveyed, 94% said they’re actively working to earn trust with their employees — 44% are responding to their personal needs, while 42% are asking for employee feedback. 94% said they’re actively working to earn trust with their employees.
About two-thirds of business leaders across all sectors report that community support (67%) and government support (69%) have been important to their company’s survival in the last year. Given the nature of retail, it’s not surprising that retail industry data is significantly higher: 79% of retail leaders say that government support — like tax relief, stabilization packages, customer incentives, and easing regulations — was at least somewhat important to their pandemic survival. Seventy-nine percent say the same of community support, like donations, positive online reviews, and referrals.
Retailers are thinking ahead, too: 74% have created scenario plans in case of future crises. This acts as a layer of protection for the businesses, themselves, and also for the customers and employees who depend on the companies.
Trend #3: Evolving customer expectations are a major challenge.
Consumers have shopped online for years, but the pandemic brought with it a need to limit trips to stores. With many brick-and-mortar stores closed or restricted, retailers had to scramble to offer new options like online shopping and contactless service. This kept retailers afloat, but also created myriad new buying habits and expectations.
Eighty-five percent of these retail leaders said bringing innovative offerings to market is a challenge in meeting customer expectations, while 78% cited difficulty in personalizing customer engagement and 77% had difficulty in keeping up with customer demands. Shifting habits have created widespread change across the retail industry.
In every industry the customer is king, but nowhere is that truer than in retail. In fact, 89% of retailers have changed the way they interact with customers since the start of the pandemic.
Trend #4: Changes made during COVID will remain for retailers.
New buying habits forced retailers to add online shopping options, upgrade their customer service, and create seamless experiences — and most businesses made gains in productivity and reach. Sure, many Americans have returned to in-store shopping, but they’re not about to give up convenient purchasing options like contactless delivery and curbside pickup.
A whopping 98% of retailers at the businesses we surveyed have moved some portion of their businesses online since the start of the pandemic. Ninety-one percent of those businesses plan to offer contactless service permanently, while 90% are actively doing more to protect data and customer information.
Why did you move more of your company’s operations online over the past year?
The survey was conducted online by the Harris Poll on behalf of Salesforce between June 21 and July 12, 2021, among 2,534 SMB owners and leaders in North America, South America, Europe, and Asia Pacific. The sample included 389 SMBs in the retail industry. Respondents were 18 years of age or older, employed full time, part time, or self-employed, and owners or senior executives at businesses with 2–200 employees and annual revenue of less than $1 billion U.S. or the local equivalent. Data points were weighted by number of employees to bring them into line with actual company-size proportions in the population.
Article top image credit: sanjeri via Getty Images
PayPal changes up its pricing
By: Lynne Marek• Published June 27, 2022
Digital payments giant PayPal said that it will change the fees it charges merchants or sellers for accepting payments for goods and services through its peer-to-peer payment system to 2.99% on those transactions, as opposed to 2.89% plus 49 cents.
It’s a move that could increase or decrease the cost based on the price of the item or service. PayPal provided an example of a $225 piece of furniture requiring a charge of $6.99 now, as opposed to $6.73 under the new pricing scheme. Still, higher-priced items over $500 would have a higher fee in the future.
Perhaps more importantly, the company said it will now restrict its U.S. customers in sending peer-to-peer payments only to consumer accounts, not to merchant accounts for goods and services.
Those belt-tightening efforts follow a slowdown in PayPal’s growth in the face of macroeconomic pressures, but also with the ebbing of the COVID-19 pandemic that led consumers to increase their digital purchases from home. The company has twice cut its growth goals for this year.
In the wake of that slowdown, the San Jose, California-based company shifted its business strategy to reduce its emphasis on attracting new users and to boost its efforts to engage its existing customers.
In announcing the pricing shift, PayPal said in a blog post that the new approach would allow the company and its users to better distinguish between personal and merchant payments. “This update helps ensure that eligible purchases of Goods and Services will be protected for both parties and will drive consistency on our platform, while also removing confusion around which payments are eligible for buyer and seller protections,” the company said in the post. A PayPal spokesperson didn’t elaborate.
The company suggested that business account holders could use or create a personal PayPal account if they want to receive non-business-related payments without seller fees, while using their business account only for commercial payments.
The PayPal pricing tweak also comes as competition in the digital payments arena spirals upward. In a hint of the challenge that poses, RBC Capital Markets analyst Daniel Perlin provided this comment on the PayPal move to the bank’s investors: “We anticipate further competition and integration of payments & technology as payment companies, technology firms and fintechs look to create seamless payment ecosystems.”
Article top image credit: Sean Gallup via Getty Images
Etsy sellers strike over transaction fee hike
Thousands of the marketplace's sellers are suspending their accounts, urging a boycott and demanding other changes as a 30% increase takes effect Monday.
By: Daphne Howland• Published April 11, 2022
On April 11, 2022, in protest over a 30% seller transaction fee hike, a host of Etsy sellers turned their accounts to vacation mode, taking to social media to blast the company and urge customers to avoid the marketplace this week.
Etsy declined to say how many are participating, but thousands have signed onto a petition site. According to a website dedicated to the strike and via social media, sellers are demanding an end to the increase as well as other reforms. Through their site, the Etsy strike organizers are providing tools like customizable shop banners, sample "vacation mode" notices and a message to customers that can be affixed to outgoing packages.
They're apparently not buying into the company's rationale for the increase. In February, when Etsy announced it would boost its seller transaction fee from from 5% to 6.5%, Chief Financial Officer Rachel Glaser told analysts that it would allow the company to "invest in more ways that benefit our sellers." In April, as the increase went into effect, the marketplace reiterated that.
"Our sellers' success is a top priority for Etsy," a company spokesperson said by email. "We are always receptive to seller feedback and, in fact, the new fee structure will enable us to increase our investments in areas outlined in the petition, including marketing, customer support, and removing listings that don't meet our policies. We are committed to providing great value for our 5.3 million sellers so they are able to grow their businesses while keeping Etsy a beloved, trusted, and thriving marketplace."
The spokesperson declined to say whether being "receptive to seller feedback" included any reconsideration of the fee change or attention to sellers' other demands.
In a blog post written in February alerting sellers to the increase, CEO Josh Silverman said the proceeds would go toward marketing that would bring them more customers, grow its support team by more than 20% and "build on last year's roughly $40 million investment in the teams and technology that help make our marketplace a safe and secure destination for handmade, vintage, and special items."
However, for many sellers the fee increase is the last straw at a marketplace that touts itself as artisanal and unique, but which, they say, caters to resellers and other mass merchants. They also say Etsy lacks transparency and makes communication difficult. According to their petitions and tweets posted to #EtsyStrike, they're demanding a tighter grip on resellers and other mass merchants, an end to Star Seller accounts, and greater transparency around other seller programs.
"Etsy made bank over the pandemic," Kristi Cassidy, one of the protest organizers, said on the petition site, noting major increases in gross marketplace sales in the last couple of years. "They followed up these record pandemic gains by turning around and sticking it to their sellers."
Earlier in April, Guggenheim analysts led by Seth Sigman flagged "potential volatility with the seller fee rate increase," noting that "some sellers are planning to temporarily pause their shops, though we expect little impact."
The protest follows a wave of labor organizing at various retailers, including REI, Starbucks and Amazon, that similarly reflects dissatisfaction with retailer priorities. In April, Amazon warehouse workers in Staten Island successfully unionized, which some labor experts say could bolster organizers' confidence at other locations.
Article top image credit: Permission granted by Etsy Strike image team
Amazon launches in-store pickup, local delivery option for businesses
By: Kaarin Vembar• Published Oct. 22, 2021
Amazon in October announced a set of services, dubbed Amazon Local Selling, which offers in-store pickup and local delivery for businesses, according to a company press release.
Customers can purchase items from merchants and select same-day pickup at the seller's local store or opt for delivery in specific zip codes. Businesses can also offer add-on services like installation or product assembly.
Local Selling is available for national retailers and small- and medium-sized businesses, per the announcement.
Amazon is expanding the scope of its omnichannel services. This time it's helping ease a friction point that is becoming increasingly — delivery.
Over half of all products purchased on Amazon are sold by third-party sellers, and the e-commerce giant is increasingly reliant on those merchants to bolster its revenue streams. In the company's second quarter of 2021, revenues from services for its third-party marketplace sellers rose 38% to $25.1 billion, and marketplace growth outpaced the company's own retail sales growth.
Local Selling is an additional sign of Amazon broadening its capacity when it comes to supply chain and logistics, similarly to what Walmart is constructing through selling its omnichannel capabilities to other businesses.
Amazon has been on a logistics-related expansion spree as it works to internally control its supply chain. The company spent $35 billion in capital expenditures in 2020, dwarfing Walmart's $10 billion. Amazon has directed much of its investments to establishing a footprint close to consumers. Now, 63% of the U.S. population lives within an hour drive of Amazon's fulfillment and redistribution centers.
"Local Selling presents enormous opportunities to a large number of sellers who want to bring more product selection to their Amazon business, enabling many to expand their multichannel offerings by integrating their physical stores and delivery capabilities with their digital operations," Jim Adkins, vice president of recreational and vocational categories at Amazon, said in a statement. "Our research shows that many customers will opt for local pickup when given the choice."
Additionally, consumers may be primed to pick up items at local stores due to pandemic-related shopping patterns. Last-mile delivery, and the cost it incurs, has long been a retail issue. But, 2020 saw a significant increase of retailers of all sizes offering BOPIS services, cutting back on the time and expense of getting goods in the hands of consumers. That trend was in part fueled by concerns regarding timely holiday fulfillment.
The services may also give Amazon third-party sellers additional options when met with costly delivery expenses. In 2021, both UPS and FedEx announced surcharges ahead of the peak shipping season, and smaller businesses typically don't have clout or scale to negotiate with these services on price.
As collectors seek out luxury watches, Tiny Jewel Box expands showrooms
The Washington, D.C., business has expanded its Patek Philippe showroom and an additional Rolex space will open in 2021 to cater to growing demand.
By: Kaarin Vembar• Published July 12, 2021
The Tiny Jewel Box is growing.
The family-owned business, which has occupied a space in Washington, D.C's retail landscape since 1930, has a rich connection with its city of residence. The company has worked with presidents, first ladies, foreign dignitaries, superstars, tourists and everyday customers.
It also weathered a pandemic and came out the other end to a skyrocketing luxury watch business.
In June 2021, the retailer opened up a 1,000-square-foot space in its store dedicated to Swiss watchmaking luxury brand Patek Philippe. And with another dedicated space to Rolex opening in early 2022, this storied retailer is becoming a global touchpoint for luxury watch collectors.
Would you buy a $33,000 watch?
To understand Tiny Jewel Box's excitement about its expansion, you have to understand what drives people to buy luxury watches. According to McKinsey & Company, the watch business had combined annual sales of over $49 billion in 2019. That segment of the market, along with fine jewelry, "represent meaningful cultural assets that have for centuries reflected human preoccupations with creativity, status, symbolism and self-expression," per the company's State of Fashion: Watches and Jewelry report.
One of the peak examples of watchmaking within the luxury market is Patek Philippe. Founded in 1839, the company is the last independent, family-owned Genevan watch manufacturer.
And collectors of the brand seriously love Patek Philippe. They revel in the craftsmanship, the elusiveness of its products, the pursuit of collecting, the ability to visually show off success and the luxuriousness of wearing the equivalent of a sports car on their wrist.
"People love setting their watches, playing with their watches, understanding the functionality of watches. There's a kind of connectedness to it that people develop," said Matthew Rosenheim, president of Tiny Jewel Box. "There's a real broad, growing culture of watch enthusiasts out there. So customers … love to come to the store and just sit with us, and talk watches and share their own passion. So we do that all day long."
And, that obsession over craftsmanship (and the bragging rights that come with ownership) comes at a price. The entry-levelprice point for a Patek Philippe is just under $20,000, with the average price point around $44,000, Rosenheim explained. And it can go higher than that — over a million dollars. "Those watches are generally not seen by the public," he said.
But, Patek Philippe is a specific kind of brand that is going to gain repeat collectors, according to Charlotte Sheridan, director of The Small Biz Expert. While some people may buy a once-in-a-lifetime indulgence piece, Patek Philippe "tends to be the second thing that people buy after they bought their own Rolex." It involves what Sheridan calls "regular treaters" that often buy luxury pieces, rather than as a one-off statement piece.
And Patek Philippe knows how to sway desire and keep its collectors guessing. The company recently discontinued the Nautilus 5711 — its most enticing, coveted watch. The timepiece, which sold for over $33,000, was rumored to have a waitlist of up to 10 years. The news flummoxed watch collectors. "The willingness to walk away from this mega-successful watch to bring focus to the breadth of what they're doing is a perfect example of long-term thinking that really shocked the watch market," Rosenheim said.
The style is currently being resold for around $100,000 on platforms like eBay. So, while some fashion products like handbags may go out of style, luxury watches have far longer staying power. "They actually increase in value as time goes on, and they become rarer," Sheridan said.
But a big reason why some collectors can't get enough Patek Philippe? It's a great way to diversify their portfolios. "It's one that's different," Sheridan said regarding investing in luxury watches. "We see the same with fine wines. There's someone [who's] got enough money to invest. They want to invest in something that's interesting — and an alternative to stocks or shares and bricks and mortar."
Expansion during a pandemic
Throughout Tiny Jewel Box's history, the company resided in a couple of locations in D.C., ultimately landing in 2015 at a busy corner at the crossroads of Connecticut Avenue and M Street, NW. The retailer went from 1,500 square feet to nearly 12,500, which enabled it to expand its designer jewelry and watch collections. At that time, Rosenheim explained, "the watch brands were demanding this global, consistent brand presence." So, even then, "a lot of the move was about watches."
By 2016, Tiny Jewel Box became an authorized dealer of Patek Philippe. The brand had an in-store showroom space of 200 square feet for four years. Discussions to expand the partnership started in late 2019 and lasted about two years, resulting in a build out of the Patek Philippe portion of the store in 2021.
But, like many small businesses that were deemed nonessential during the roughest days of the pandemic, Tiny Jewel Box had to temporarily shut its doors in mid-March of 2020, only to reopen at the end of June of that year. Yet, the company still had its eyes set on the future. Because while a global economy was reacting to the pandemic, the luxury space was still growing.
"Prior to the pandemic, the demand far outstripped supply," Rosenheim said. "Demand never abated during the pandemic. If anything, it got stronger."
During 2020, affluent customers still were seeking ways to celebrate occasions and commemorate milestones, and many marked those events by looking to the luxury watch market since they couldn't do things like travel. "But the truth is, the demand for Patek as well as for Rolex is really stronger than it's ever been probably in the history of the brands," Rosenheim said.
While Tiny Jewel Box saw increased interest in its luxury brands, the overall watch market has taken a spill during the pandemic, experiencing a 25% to 30% revenue decline. The segment is expected to rebound between now and 2025, with a modest 1% to 3% increase per year, but with luxury and ultra-luxury players continuing to drive growth. Additionally, McKinsey forecasts that around $2.4 billion in revenue will transfer from retailers to watchmakers as direct-to-consumer options increase in popularity, thereby cutting out traditional retailers. Ultra-luxury watch segments (defined as products over $30,000) could expand DTC sales from 20% in 2019 up to 30% in the next four years.
There are exceptions to this projection, though. Two companies are named by McKinsey as being exempt to the upcoming trend: Patek Philippe and Rolex. Those companies "remain outliers to the DTC wave," the analysts wrote, "and are not expected to change that position."
That means that Tiny Jewel Box, with its expanded Patek Philippe offering and upcoming build out of Rolex, is well suited to do what it does best: build personal relationships with shoppers and collectors. Their product offerings are projected to remain largely untouched by larger DTC growth.
Meanwhile, Tiny Jewel Box is trying to keep up with customer demand.
"I think the appreciation for fine watchmaking in the United States has a lot of room to grow," said Rosenheim. "We have a real collector's culture that is evolving in this country. And, a fine Swiss watch is an aspirational product to someone one who got their first promotion or their first job."
Article top image credit: Courtesy of Tiny Jewel Box
Citing store theft, 20 major retail CEOs call for Congress to pass marketplace transparency legislation
By: Daphne Howland• Published Dec. 10, 2021
In a letter to Congressional leaders of both parties, 20 retail executives urged passage of the "Integrity, Notification and Fairness in Online Retail Marketplaces" (INFORM) Consumers Act, which among other provisions would require greater transparency around online sellers operating on Amazon, eBay and other marketplaces.
The group includes the CEOs at Target, Nordstrom, Neiman Marcus, Levi's, Dick's Sporting Goods, Best Buy, Ulta, Dollar General, CVS Health and Walgreens, among others.
The rules would help law enforcement tackle the spate of retail thefts plaguing retailers across the country and reduce their appeal by making it more difficult to sell stolen goods online, according to research from the Buy Safe America Coalition, a Retail Industry Leaders Association project.
Some $68.9 billion worth of goods were stolen from retailers in 2019, before the pandemic and the recent rash of organized store thefts, according to Buy Safe America. Now, nearly 67% of asset protection managers at major retailers report a "moderate to considerable increase in organized retail crime," and even more anticipate the situation worsening, according to the group's report.
Among the most high-profile organized retail thefts in 2021 was a smash-and-grab robbery at the Nordstrom store in San Mateo, California. Following that, several retailers joined Nordstrom in curtailing their hours in an effort to keep customers, employees and merchandise safe, according to the San Jose Mercury News. California Attorney General Rob Bonta in 2021 announced the sentencing of "multiple defendants" in a theft of $8 million worth of goods from CVS, Target and Walgreens stores.
"There's also been a couple of $1 million busts of goods such as over-the-counter drugs, and beauty products and cosmetics," Michael Hanson, RILA's senior executive vice president of public affairs, said by phone. "And when you have that much stolen consumer goods, you're not selling that on the street or in a flea market, and it's become difficult to sell to pawn shops now, given the rules that most states have put in. So the last place that's left to move that many products is online."
If enacted, the INFORM law would require online retail marketplaces that include third-party sellers to authenticate the identity of "high-volume third-party sellers," according to an earlier press release from Senator Dick Durbin, D-IL, one of its sponsors. That would "help deter the online sale of counterfeit goods by anonymous sellers and prevent organized retail crime rings from stealing items from stores to resell those items in bulk online," per that release. The bill would also allow shoppers to see such sellers' basic identification and contact information.
That would make it easier for law enforcement to track the flow of stolen goods, and could help reduce crime by interfering with what is now a fairly easy sales channel for stolen goods, Hanson said.
After previously opposing the legislation, marketplaces Etsy, Mercari, eBay, Poshmark and Offerup in October 2021 endorsed the new version of the bill. A Walmart spokesperson previously told Retail Dive that it fully supports the legislation.
An Amazon spokesperson said the e-retailer supports the House version of the bill, but declined to comment on the connection, made by RILA and the 20 CEOs, between the raft of retail crime and the ease of selling goods online. "Amazon does not allow third-party sellers to list stolen goods in our store, and we work closely with law enforcement, retailers, and brands to stop bad actors and hold them accountable," the spokesperson said in an emailed statement.
Retail theft tends to be a crime of opportunity — most thieves take what's easiest to steal, when and where it's easiest to get away with it. "However, professionals in the field identify the availability of anonymous on-line marketplaces as ways to easily fence goods, and prosecutorial changes as being major factors contributing to the growth in [organized retail crime]," Buy Safe America says in its report.
The group also notes other factors at play, including "poor economic conditions, and dissatisfaction among workers."
Article top image credit: Daphne Howland/Retail Dive
Postal Service courts small shippers with next-day local delivery service
By: Max Garland• Published Feb. 22, 2022
The U.S. Postal Service has launched a next-day delivery service geared toward local businesses shipping within their community. The new service comes as carriers vie for a larger share of parcel volumes from small shippers.
USPS Connect Local is currently available in more than 800 Texas locations and will soon be live in all 50 states, said Steve Monteith, USPS chief customer and marketing officer and executive vice president, during a press briefing. It also offers same-day and Sunday delivery at select locations.
The launch gives small businesses access to the same capabilities that USPS has provided to larger shippers over the years, according to Monteith. Rates for Connect Local are available on USPS' website.
USPS is looking to capture more business from small- and medium-sized shippers in a time of increased interest in the segment among parcel carriers. Unlike large shippers, SMBs don't come with massive volumes that could unsteady a delivery network and are generally more profitable for carriers on a per-package basis.
Monteith said USPS Connect, the new program which Connect Local is part of, is "really about selling solutions for these businesses — a medium-sized business, a small business, a micro business."
Small shippers are trying to keep up with the acceleration in e-commerce demand and rising consumer expectations on delivery speeds just as much as their larger counterparts. According to a survey of 500 enterprise retailers commissioned by Bringg, 63% of U.S. respondents already offer next-day delivery and 26% offer same-day delivery in an effort to match consumer expectations.
USPS Connect Local is particularly suited toward local businesses wanting to provide next-day and same-day delivery in their area, said Jakki Krage Strako, USPS chief commerce and business solutions officer and executive vice president, during the briefing. For same-day delivery through Connect Local, a business needs to bring its packages to the local post office between 5 a.m. and 7 a.m., she added.
"Businesses with a customer base in their ZIP code or ZIP code served by their post office will find this solution extremely beneficial," Strako said of Connect Local.
To process and deliver local shipments quickly, USPS is using a new operational model for Connect Local. A Connect Local package stays at its local post office for processing and delivery, bypassing the extra step of being transported into the USPS plant network, Strako said. This allows packages to be delivered by the next day, rather than going through a two- to three-day delivery process.
"Operationally, we are having a savings there and we're passing that savings along in our affordable pricing for the customer," Strako said.
USPS piloted Connect Local in Texas because it allowed the agency to test its capabilities in a range of urban, rural and suburban settings, Monteith said. He added that USPS targeted areas where it "had opportunity in terms of number of small businesses" for the national Connect Local rollout, and the agency plans to offer the service in more than 3,400 locations.
Article top image credit: Justin Sullivan via Getty Images
Mastercard teams with fintechs on small business card
By: Caitlin Mullen• Published Feb. 10, 2022
Card giant Mastercard will lock arms with two San Francisco fintechs, Flowcast and Highnote, to create a credit card for small and medium-sized businesses, offering a new card geared toward business owners who struggle to access credit and growth capital, according to a February news release.
Highnote, also based in San Francisco, will handle card issuance and program management, and Purchase, New York-based Mastercard will serve as the card network, per the release.
The card will be available early in 2022, Highnote CEO and co-founder John MacIlwaine said in an email.
Small business borrowers who are "credit invisible" tend to be overlooked for financing opportunities, "especially if you look at traditional business cards that are in the market right now, because of challenges in underwriting and the lack of credit history for these businesses," MacIlwaine said via email.
He envisions the new card bringing underbanked small businesses into the credit economy and creating "a more inclusive credit system."
The new offering comes as fintechs use partnerships to establish themselves and encroach on legacy players' territory in the business credit segment. MacIlwaine, former general manager of PayPal's Braintree, said the new card will differentiate itself from fintechs like Brex and Ramp through its unique combination of services. Flowcast, backed by ING Ventures and Bitrock Capital, refers to the new product as the Tillful card.
"Our direct integration into the card networks will give Tillful and its customers greater flexibility and control in their spend management; with our general ledger, Tillful card customers will get real-time data on transactions and spending across their business operations," MacIlwaine said. "Our rewards and points ledger open up possibilities to create flexible and customized reward offerings relevant to the small business community."
For small business owners, "access to fast, secure and convenient payments is critical," Sherri Haymond, Mastercard's EVP of digital partnerships, said in the release. As the segment continues to evolve digitally, "it is imperative to provide solutions that work harder for them and their operations," she said.
Flowcast uses artificial intelligence to develop its credit risk models. With Tillful, cardholders' payment history is reported to credit bureaus to enable businesses to build credit; the card also offers a rewards program tailored toward small business owners, who can create virtual cards for their employees.
Highnote, which was founded in 2020 and has raised about $54 million in capital, also will support embedded banking and payment services through the Tillful card, according to the release.
Article top image credit: Justin Sullivan via Getty Images
A former J. Crew store employee is now one of its star collaborators
Blackstock & Weber Founder Chris Echevarria, who as a store employee once caught Mickey Drexler's attention, sees the classic men's loafer as an ideal canvas.
By: Daphne Howland• Published Sept. 24, 2021
What does a brand that once helped define American style do when its fans drift away and the younger generation takes little notice of it?
If you're Gap, you might turn to a fashion-minded hip-hop superstar, who once rapped about stealing from you when he worked in one of your stores as a youth, in order to surf his notoriety. If you're J. Crew, you might turn to a free-thinking, fashion-minded designer, who once made an impression on your chief executive when he worked in one of your stores as a youth, in a quest to find your next chapter.
"I don't know much about what Kanye's goal may be with the Gap collab," said Chris Echevarria, who started his DTC menswear company, Brooklyn-based Blackstock & Weber, in 2018. "But my goal, as somebody who's lesser known, is to be able to amplify ourselves through J. Crew's platform, as I give J. Crew something that they probably wouldn't have done, just through the eyes of a younger company that has a different perspective on where American menswear might be going at this point in time."
When Echevarria was still an undergraduate at the Fashion Institute of Technology, he worked at the J. Crew Liquor Store, a concept in Manhattan that recently closed, and caught the attention of J. Crew's then-CEO Mickey Drexler. Eventually Drexler tapped him to help out with the brand's In Good Company effort, where J. Crew explores collaborations, to help scout potential brand partners.
"We started having conversations about what I liked and the things that I saw on the market, and would have just off-the-cuff conversations," he said by phone. "He would stop into the store because it was his baby. I left there with a friend in Mickey and several people that worked for the company, so even while I was in school I was able to kind of create a stamp on that period of menswear that felt really important, before I even really got my feet wet in New York City."
The J. Crew collaboration features the men's loafers that are the cornerstone of Blackstock & Weber's assortment. The first iteration was released Friday, with another coming in mid-October; each pair retails for $345. Echevarria landed on the classic footwear as the ideal canvas for an updated shoe that could step away from the ubiquity of sneakers, while nodding to the way sneakers and streetwear are embedded in the culture.
"I wanted to not only provide those black and brown classics for people, but show them that the shoe is just as versatile as, say, your favorite sneaker," he said. "One of my favorite sneakers is the Air Force One. The Nike Air Force One has a deep history of media play, or color play. It's hundreds of colors, spanning years and years and years, just on this one silhouette. You can get them in white or black, and those are your staples. It's just a really good base."
He also leveraged streetwear's drops sales approach. Blackstock & Weber regularly releases its fresh takes on the loafer at noon on a Friday, and they sell out by 12:30. The retailer has forged several collaborations with other brands, "J. Crew being one of them," he said. "And those operators drop releases as well. So we've kind of created this thing where we are the people that have sort of reinstituted and made the loafer cool again."
Echevarria's faith in the staying power of an old-fashioned shoereflects his belief that brands have ceded their own power to shape and reshape fashion. Elements of his designs, including the quality and sustainability of the fabric, reflect what's important to him, beyond their utility in marketing.
"One of the things that we've gotten away from in retail in general is being the people that show the way, as opposed to being a brand or a company that follows," he said. "Like when a brand starts to make one thing, and then others kind of try to shove themselves through the door before it closes. The thing that's really important here is that when I decided I wanted to do a loafer, my head instantly went to — how do I contextualize this differently from how people already know it? My goal is more about the contextualizing of what I view as staple menswear. So whether that be a loafer, whether that be a suit, whether that be a damn T-shirt, you know, how can I make this in a way that I could be proud of."
Echevarria remains undaunted by the serious challenges in his category, in part because he has spurred sales of a shoe that some men may have previously only seen in childhood, perhaps visiting their grandfathers or watching "Mister Rogers' Neighborhood."
"One of the things I love is seeing people that probably would never wear loafers, the comments or emails that I get saying, 'You prompted me to buy my first pair of loafers,'" he said. "Those are the things that I it do for. And I think those are the things that really make the difference in this industry, if we're going to carry menswear forward. We have to tell the story in a different way. Just as Ralph [Lauren] told the story in a different way, just as Tommy [Hilfiger] told the story in a different way. I'm going to tell this story in a different way, for our generation."
Article top image credit: Courtesy of Blackstock & Weber
The state of small business in retail
The pandemic has impacted the trajectory of small businesses, particularly squeezing stores that were deemed non-essential during periods of required closures. Now independent retailers have started to experiment with solutions that used to only be available to mass marketers or large national chains.
included in this trendline
Etsy sellers strike over transaction fee hike
Surging inflation compelling small businesses to raise prices
Amazon launches in-store pickup, local delivery option for businesses
Our Trendlines go deep on the biggest trends. These special reports, produced by our team of award-winning journalists, help business leaders understand how their industries are changing.