Small Business Retailers Have a Big Impact on the Economy
Retail businesses account for 1 in 4 jobs in the United States. Considering that 98.6% of those retail companies employ fewer than 50 people, it’s clear that small business plays a big role in the retail market. Tweet This While these businesses may not be large, their economic impact is significant, supporting 42 million jobs both directly and indirectly and impacting $2.6 trillion in total GDP.
Retail trade on the rise
Retail sales forecasts show a high consumer confidence, projecting over 90 percent in the first quarter of 2016. Annual consumer spending is expected to rise from $11.3 billion in 2015 to $12.9 billion by 2020 as is disposable income, rising from $13.7 billion to $16.0 billion. The retail trade industry is projected to grow 5 percent by 2024, adding three-quarters of a million jobs over the next decade. Of this expected job growth, the largest increase in employment for retail* is in specialized merchandise and apparel with 251,000 positions.
Small business bounces back
It’s well-documented that big box retailers have had an effect on the business marketplace, and the US economy overall. A 2008 study from MIT analyzed the impact of the 1980’s-1990’s Wal-Mart boom and found the giant retailers was responsible for a 40-50 percent decline in small discount stores. That same year the Journal of Urban Economics reported that every Wal-Mart worker replaced approximately 1.4 retail workers. Facing this competition and decline, small business owners had to change strategy to stay competitive and profitable.
More recently, small business optimism has been improving since 2008. In a 2015 Gallup survey, small business owners measured their highest optimism levels since 2008, a significant improvement over its 2010 low. Small business owners are specifically showing upbeat views when it comes to economic growth and unemployment, as well as company hiring and consumer spending.
The online marketplace increases opportunity
An important area of retail opportunity for small business is the continued growth of e-commerce sales. Many retailers are embracing a balance of online and in-store shopping. Adding online sales has allowed retailers to reach larger audiences and conduct transactions internationally.
Small businesses retailers without their own large audiences are also seeing more opportunity from online marketplaces. Amazon, for instance, has reported that third-party vendors account for 40% of their sales. Etsy is an example of a marketplace that only acts as a middleman, connecting small business and artists to Etsy’s larger audience. Etsy’s 2015 Q3 report showed over 1.5 million active sellers and 22.6 million active buyers for the first 9 months of 2015, generating $1.6 billion in gross merchandise sales prior to Q4 and the holiday season.