2015 Survey Finds Strong Sales Growth for Independent Businesses Buoyed by Public Support [5]

Independent businesses experienced strong sales growth in 2014 as more consumers embraced the “buy local” movement and ditched big companies in favor of supporting local retailers and small-scale producers, according to the results of the 2015 Independent Business Survey [6]. The eighth annual survey, conducted by the Institute for Local Self-Reliance [7] in partnership with Advocates for Independent Business [8], gathered data from more than 3,000 locally owned businesses, including members of the American Booksellers Association.

Respondents reported brisk sales in 2014, with revenue growing 8.1 percent on average in 2014, up from 5.3 percent the previous year. Independent retailers, which made up about half the sample, saw revenue increase 5.1 percent in 2014, versus 2.3 percent in 2013. Holiday sales at local stores also grew by an average of 4.8 percent, beating the performance of many national chains and coming in well ahead of the 0.9 percent decline in December retail sales reported by the U.S. Department of Commerce.

The survey results suggest that the strength of the independent sector is owed partly to an improving economy and partly to the spread of the “buy local” movement. Businesses located in cities with active Local First campaigns reported sales growth of 9.3 percent, compared to 4.9 percent for businesses located elsewhere. Survey respondents cited a wide range of direct benefits from “buy local” campaigns, with half saying the initiatives had generated new customers and 45 percent saying they had resulted in more awareness and support among city officials.

“This latest survey once again demonstrates the power and vitality of local, independent businesses,” said ABA CEO Oren Teicher. “Facts are facts — the numbers make clear that innovative and hard-working entrepreneurs are outperforming their chain competition, spurring long-lasting job creation, and showing the difference a healthy local economy can mean for communities. It’s now time for lawmakers to commit themselves to policies that level the playing field, promote localism, and sustain smart growth.”

Nearly three-quarters of the local retailers surveyed said the fact that many online retailers are not required to collect sales tax had negatively impacted their sales, with 39 percent describing the level of impact as significant. “As a local business owner with a brick-and-mortar location, we are automatically at an 8.1 percent price disparity because we are required to collect local sales tax,” said one Arizona business owner. Since Congress failed to pass an e-fairness bill last year, a large majority of independent retailers are now backing state legislation to level the playing field.

Survey respondents also reported that difficulty accessing credit continues to be a major barrier for new and growing small businesses. Of those who sought a loan in the last two years, 30 percent said they had been unable to obtain one. Businesses owned by people of color and women fared even worse. More than 44 percent of minority-owned businesses seeking financing and 35 percent of those owned by women failed to secure a lender. The survey findings echo federal data that show that bank lending for big businesses is well above its pre-recession peak, while small business lending remains depressed.

Large companies exercising their market power to win better pricing and terms was cited as another key issue, with more than half of independent retailers rating it as a very or extremely significant challenge. Nearly two-thirds of all respondents said they believed government should more vigorously enforce antitrust laws against dominant firms, while only 9 percent opposed increased enforcement.

“More people are seeking out independent businesses, which we know from academic research is great news for job creation, income growth, and the well-being of communities,” said Stacy Mitchell, senior researcher at ILSR. “Now we need policymakers to step up and create a level playing field to allow locally owned businesses to really thrive.”

The full report can be downloaded from the ILSR website [6].