While Wall Street rewarded large box stores for their sample sales volumes during the pandemic – driving retailers like Target to a record high this week – thousands of small businesses across the country are still hanging on to a thread.
The growing gap between retail giants and smaller, locally-run stores underscores the impact of the pandemic of driving a wedge between the haves and emergency notices across the sector as consumers move to bulk-buying and one-stop-shops shops.
“We share second-quarter results that are, by almost every measure, exceptional,” Target CEO Brian Cornell told investors on Wednesday. “The incredible resilience of our team, the way they first rose to prominence after the pandemic, then the social trauma that hit here in Minneapolis in May is no different than anything I’ve seen or will likely see again in my career. “
Target’s online sales rose 24 percent in the quarter ended August 1, compared to the same time last year. The company also raised $ 5 billion in additional market share in the first half of the year, Cornell said.
Walmart saw a 97 percent increase in online sales in the quarter compared to the same time last year, and online sales at Lowe’s jumped 153 percent. Home Depot reported a 23 percent increase in sales, driven by people looking to improve their space while sitting at home.
With cases of coronavirus continuing to increase in parts of the country, people are not daring to shop as much as they used to, which has led to a flurry of in-store shopping and small businesses operating in the early days of the country. viruses were not categorized as essential services.
Before the pandemic, people in different stores were shopping for different products. Well, all that is disturbed because no one wants to go outside.
“What once happened before the pandemic was people shopping in different stores for different products – and that’s disturbing because they do not want to go outside,” said Neil Saunders, managing director of GlobalData’s retail division. “The stores we visit are the ones that get more out of our spending, and Target and Walmart have really benefited.”
But as retailers take advantage of people consolidating their shopping choices at one of their hundreds of chain stores, small businesses have a hard time surviving. Many more small business owners experienced lower sales from May to July compared to the previous three months, according to Christopher Carlozzi, a state director at the National Federation of Independent Businesses. Sales at small businesses stood at negative 28 percent, nine points down from May when it was at net negative 19 percent, he said.
There are no extensive data on how many small businesses have closed since the pandemic. But from March 1 to August 11, about 155,000 companies were laid off, according to the online rating site Yelp. The company estimates that about 91,000 of the closures are permanent. The American Bankruptcy Institute, a trading group representing bankruptcy law professionals, expects the total number of small businesses to file for bankruptcy by 2020 to increase by 36 percent from last year, according to Bloomberg.
“Some of these small businesses did everything right,” Carlozzi said. “I will not say they did it well, but they did OK.”
The Federal Government’s Paycheck Protection Program, introduced in March as part of the CARES package for coronavirus relief, was designed to provide a lifeline to small businesses by covering the costs of their staff. With more than half of the country’s workers employed by small businesses, the program was intended to protect a vulnerable group of employees who faced unemployment when those businesses were cash and were forced to close. But the program is riddled with controversy, and many business owners failed to find funding.
For Neil Abramson, the program helped deter layoffs, even though his franchise company has now reached 80 percent of the sales it made at the same time last year. Abramson closed its doors at ECI Stores in Leominster, Massachusetts, for three months this year, and all 22 employees were placed on furlough. Now that he has opened a backup, Abramson has relocated all of his staff, and has moved inventory online to get sales from customers who do not feel safe entering the store.
“You cannot replace three months’ income. “But we can grow out of this,” said Abramson. “I believe this will work. We will not always be afraid to get out of the matter.”
