In what seems like an interminable rebuilding year for small and medium businesses (SMBs), Labor Day weekend sales — and back-to-school selling that typically precedes the holiday weekend — are seen as leading indicators of their all-important fourth-quarter receipts.
As of now, however, much remains unclear on all fronts.
Conducting surveys of SMBs since 1973, the National Federation of Independent Business (NFIB) released its 2021 Small Business Economic Trends report in July, noting that its Optimism Index fell by 2.8 points to 99.7, “reversing nearly the entire 2.9-point gain in June’s report.”
According to the NFIB, “Small businesses continue to struggle to find workers to fill open positions” with a record-high 49% of owners reporting that they had job openings they could not fill in July, up three points from June, and sharply above “the 48-year historical average of 22%.”
That imbalance could change radically in September, as federal unemployment benefits that were extended under the CARES Act due to pandemic lockdowns expire the week of Sept. 6, with only a handful of states extending them. For SMBs, the expiration of unemployment benefits is expected to drive millions to seek work.
Assuming workers surface to fill empty jobs, small businesses are still navigating complexities from the delta variant to supply chain snags that may find store shelves barer this year.
Guarded Optimism Prevails — for Now
Despite these challenges, many SMBs are upbeat about their odds in Q4 2021. The most optimistic appear to be those that embraced consumer demands for digital channels and increased payments options over the past 18 months.
In its U.S. State of Small Business report done with the advocacy group Small Business Roundtable and published earlier this year, Facebook said, “Many that closed earlier in the pandemic have been able to adapt and reopen, helping to reduce the number of people out of work. And many have relied on the internet to do this, with more than one-third of small businesses saying they have increased their use of digital tools during the pandemic.”
Also finding optimism mixed with uncertainty, the U.S. Chamber of Commerce’s Small Business Index Q2 2021 states that “nearly two-thirds (64%) of small businesses remain concerned about the impact of the novel coronavirus on their business. However, this represents a 12-percentage-point decline from last quarter and 21 points from this time last year.”
PYMNTS’ most recent 2021 Main Street Business Survivor Study noted that quick pivots to digital and omnichannel — along with a good bit of improvisation — saved many SMBs.
“The Main Street SMBs that have managed to stay in business have adapted their approaches to market to sell their products and sidestep any potential cash flow crunches. Fifty-two percent began advertising or selling on digital marketplaces during the last year: 38% started to advertise on digital marketplaces to boost their sales and 31% began selling on digital marketplaces,” per the report.
SMBs’ Summertime Blues Take the Digital Cure
What seems clear by now is that SMBs and enterprise merchants alike can expect supply chain disruptions to influence their in-stock positions come winter gifting season.
In mid-August, The Wall Street Journal reported that “traffic at grocery stores, gas stations, gyms, restaurants and retail stores fell starting in late July, after surpassing 2019 levels earlier in the summer, according to mobility metrics from data firm SafeGraph. Weekly domestic flights declined last week, for the second time since mid-April.”
SMBs may assuage consumer frustration over looming product shortages with better digital experiences. Tech news site CIO recently reported that “…technology and the agile processes that drive its implementation have become great levelers in today’s information age. Many SMBs have tasted success (and grown exponentially) owing to the parallel rise of the sharing economy and affordable SaaS solutions.”
CIO added that “SMBs are seeing value in stepping up investments in digital transformation with specific primary and secondary objectives à la the enterprise. A fifth of over 3,600 SMBs surveyed by Techaisle reported that the disruptions caused by the pandemic had amplified their belief in organization-wide digital transformation, leading them to look at it more holistically and strategically.”