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Small Business Revenues are Up – But New Challenges Emerge as Businesses Continue the Pandemic Comeback

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Archives, Global Trade Daily, International Trade

Small Business Revenues are Up – But New Challenges Emerge as Businesses Continue the Pandemic Comeback

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Kabbage from American Express has been tracking recovery trends and growth outlook of U.S. small businesses. Polling 563 small business leaders, our latest installment exhibits how small businesses are adapting to a shifting market as they look beyond pandemic-wrought challenges, adjust for inflation and modify hiring approaches.

Small businesses are preparing for a new type of market. One that’s not driven by the direct impact of COVID-19 – but rather, one determined by the economic aftermath of the pandemic.
Economic indicators like inflation will require adjustments, but the new data illustrates how small businesses are making changes and adapting.

COVID Concerns Wane

Our data suggests U.S. small businesses are now less impacted by the pandemic. In the latest Small Business Recovery Report, responses showed over 90% of businesses did not have to stop, slow, limit or shut down their companies due to the Omicron COVID-19 variant, while 70% stated they weren’t affected at all.

With pandemic challenges subsiding, U.S. small businesses are growing. Respondents reported their average monthly revenues increased 77% in the past six months, from $47,900 in July 2021 to $84,935 in February 2022. Additionally, average monthly profits have increased an average of 39% in the same period.

Although, these growth percentages are heavily weighted toward larger small businesses. The smallest small businesses—those with fewer than 20 employees—reported a 13% increase in average monthly revenues and a 12% increase in average monthly profits from July 2021 to February 2022, while large businesses reported 145% and 29%, respectively.

Adjusting for Inflation

Respondents reported increasing prices by an average of 21% across industries, largely due to increased costs from their vendors (54%) and of raw materials (45%).

Looking ahead, 65% of businesses plan to keep prices at this inflated, current rate for the next six months, while nearly one in five (18%) said they plan to raise prices even more. Combating increasing costs of their own is a primary contributor, and over half (53%) expect their business to be impacted by supply chain issues for the next three months to a year.

A Shift in Hiring

The Department of Labor’s February jobs report shows that employers added 678,000 jobs in February and the unemployment rate declined to 3.8% – the lowest level since the COVID-19 pandemic hit the U.S. economy two years ago.

With more headcounts filled from a decline in the unemployment rate, those record numbers were corroborated in the Small Business Recovery Report.  Three quarters (75%) of the smallest small businesses said they are not hiring. Yet, challenges persist among medium and large small businesses as 59% reported hiring today is just as, or more, difficult than it was at the end of 2021.

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Archives, Global Trade Daily, International Trade

Fashion Retailers & Brands will need to Adapt As the Industry Emerges from the Pandemic 

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The coronavirus pandemic has thrown the entire industry into crisis. Beyond its tragic human cost, the disruption inflicted on businesses has been unprecedented. Footfall has disappeared from the high street as people practice social distancing, while demand for non-essential products such as fashion has dwindled.

With international flights grounded and much of Europe and the United States on lockdown, boutiques are concerned about how they will shift this season’s summer dresses and beachwear. Likewise, small independent fashion brands are apprehensive about retail sell-through and how their stockist partners will be able to pay their invoices.

For many businesses, innovation will be key to getting through this extremely challenging time. The government has laid out plans to help businesses with schemes such as loans and grants. However, this type of aid will only stretch so far.

Some boutiques are taking drastic measures to reach their customers. Several closed their bricks-and-mortar stores early on, deciding to concentrate on their online offering to ride out the storm. Meanwhile, those retailers without an online presence have been thinking outside of the box. Some have locked their doors for one-to-one appointments while others are conducting telephone consultations on FaceTime and personal shopping sessions via WhatsApp.

But selling to customers is just one part of retailing. Buying for the store and its shoppers is just as critical for sustaining a profitable business. Trade shows, buying trips and fashion shows are a fundamental part of the chain – and we have already seen many cancellations since the outbreak began to take hold. Will the pandemic be over when brands re-open their order books for SS21?

Forward ordering is another concern for many small independent retailers right now. With sales of SS20 season stock now under threat, many are worried about AW20 orders written just weeks ago arriving in July and August. If they decide to cancel now, what happens if sales begin to pick up and they’re left with empty rails? Likewise, if they don’t cancel, will they end up with surplus stock that they can’t pay for?

For many, using budgets to buy in-season offers a straightforward solution. Because when the panic subsides and sales begin to pick up – which they inevitably will – ensuring that stores have the right stock in place for shoppers will once again be paramount.

B2B fashion marketplaces such as TradeGala will become increasingly important for retailers. Effectively removing the need to travel or visit trade shows and showrooms, buyers can browse multiple brands online and place orders directly. The brands on the site offer in-season delivery, meaning retailers can order what they need as and when they need it. Plus, it’s easy to check live stock at a glance so buyers can see exactly what’s available with just a few clicks – minimizing any concern surrounding supply chains.

For brands, TradeGala is offering free registration during this crisis period to offer time to prepare for when the market revives. The marketplace is also building its international following of buyers, allowing labels to reach buyers in markets that are less affected by the crisis to help minimize the drop in sales.

The coronavirus pandemic has changed the world and the retail sector needs to adapt in order to survive. There is a challenging time ahead, but retailers and brands are working together in new and effective ways. More than ever before, it’s time to support each other. And if there’s one thing this industry is good at it’s triumphing over adversity.