59% of Small Retailers at Risk of Shutting

Nearly half of small business owners, including 59% of retailers, say they are at risk of shutting down in the fall, up 12% from last year’s survey, according to a new report from Alignable, an online referral network for small businesses.

Half of the small retailers surveyed in Alignable’s Small Business Revenue Report say they’re cutting back on orders for the Q4 holiday season, with 38% of those businesses reporting that they’re reducing orders by more than 20% compared to 2021.

The report found that 35% of small businesses in June couldn’t pay rent in full or on time, up from 9% in January. According to Alignable, a majority of minority-owned and women-owned small businesses indicated they could go under this fall.

Respondents cited several factors threatening the survival of their small businesses, including spiraling inflations, higher interest rates, gas prices, rent hikes, supply chain disruptions, lower consumer spending and losses left over from the pandemic.

According to Alignable, retailers are among the industries in which a large majority of business owners are saying that inflation is hurting them more than the pandemic did, noting that government support that helped them during lockdowns is not available to offset the impact of consumer price increases.

Smaller retailers are putting in fewer orders for holiday season inventory as a defensive measure to avoid potential losses, the report said.

Conducted among 4,392 small business owners from June 10 to July 13, Alignable’s survey asks respondents to assess the degree of financial risk they currently are facing. The survey found that less than one-quarter of the respondents expected to make more than they earned last summer, while 54% said they would bring in less revenue than they did in the summer of 2021.

In June 2021, 33% of small business owners in the survey reported they were earning the same monthly revenues (or more) than they did before the pandemic, a figure that dropped to 26% in the new report.

According to Alignable, Colorado, Michigan, Ohio, Pennsylvania and Texas have the highest percentage of businesses who indicated their shops are in jeopardy. About 63% of the respondents said that inflation has been a bigger challenge to their businesses than the pandemic.

Like several other sectors across the economy, small businesses are coping with a labor shortage that is crippling their recovery.

According to data released last month by the National Federation of Independent Business, a record 51% of US small business owners in May said they had open positions they couldn’t fill. This represented a 4% increase from April and matches the record set in September, GlobeSt.com reported.

Almost half of the small-business owners confirmed they have raised the compensation they’re offering while seeking new workers.

According to NFIB’s data, a quarter of small firms said they plan to raise worker pay this summer, a decline from the record of 32% in Q4 2021 but still historically a high level.

About two-thirds of small business owners reported hiring or trying to hire workers in May, up 8% from April, but of those respondents, 92% reported few or no qualified applicants for the positions they were trying to fill.