Small Business Becomes Major Focus of Holiday-Shopping Campaign

Talk about good timing.  A small-business holiday-shopping campaign led by American Express is peaking this week, just as a new survey says Americans have the warm and fuzzies for local mom-and-pop shops.

The promotional campaign, Small Business Saturday, aims to support small businesses on one of the busiest shopping days of the year: the Saturday after Thanksgiving. 

American Express is offering in-store promotional signs, online marketing materials, and $100 in free Facebook ads (while they last) to certain participating retailers. FedEx, one of the top sponsors, is giving away 30,000 “Shop Small” American Express gift cards worth $25 each as part of the promotion.

American Express says that last year, the participating businesses saw a 28 percent jump in sales compared with the same shopping day in 2009.

At the same time, a survey out this week finds that Americans have positive vibes about small business but have more mixed views on big companies.

The Public Affairs Council’s national survey found that small companies received a favorable view among 90 percent of survey respondents, compared with 61 percent for major companies (and 35 percent for the federal government, by the way). Nearly half of those surveyed said small business owners have ethical standards, compared with only 6 percent who said that about CEOs of big companies.

As a matter of fact, almost two-thirds of people said they’d rather do business with a smaller, local company that might charge somewhat higher prices than do business with a larger, national company charging lower prices.

Small businesses drive approximately 50 percent of private sector GDP and 65 percent of new job creation, so they’re an important part of the U.S. economy and the hiring picture. The latest ADP National Employment Report said that employment on payrolls of up to 499 workers increased by 111,000 between September and October, while employment declined by 1,000 on payrolls with more than 500 workers.

Sageworks, which conducts financial statement analysis (http://web.sageworksinc.com/financial-statement-analysis/), recently took a look at how private retailers are faring so far this year compared to publicly traded ones, and found that private retailers’ sales growth is outpacing that of public companies.

“In general, it seems that privately owned retail has shown stronger sales growth than their public counterparts, at least partly because they took a bigger hit in sales growth during the low points of the recession,” said Sageworks senior financial analyst Michael Lubansky. “As such, some of the higher sales growth now is likely a rebound from the low numbers in 2009.”

[IMGCAP(1)]

But some of the higher relative growth could also be due to the increased prominence of the “Buy Local” movement, according to Lubansky. “In addition to sustainability benefits, this movement reflects an increased sentiment towards supporting the local business community, more personal interaction, and more comfort in a smaller shopping environment,” he said.

Some big retailers have responded by introducing smaller stores and “pop-up” shops, and Lubansky said it remains to be seen if these trends will continue. Similarly, he said it remains to be seen how much of the trend in Sageworks’ data is due to these structural influences, as opposed to a bigger rebound from the large sales declines during the recession.

A recent survey by the small-business online community Manta found that four in 10 respondents are heading into the busiest shopping season of the year with better sales than they had last year.

Joseph E. Nerkowski, who runs Holiday Lighting Inc., a lighting designer and wholesaler in Ubly, Mich., said sales going into the few weeks before Black Friday and Small Business Saturday are about even with last year.

“I wouldn’t say robust, but we’re on an even keel,” he said. “And in this economy, I’d accept that.”

Mary Ellen Biery is a research specialist at Sageworks Inc.