Spending at small businesses has shown a positive uptick in July, indicating a potential economic revival post-pandemic. This increase in spending has been primarily driven by strong sales in general merchandise and health products, reflecting consumers’ growing willingness to part with their cash as they regain confidence in the economy.
The Fiserv Small Business Index, which is calculated based on transaction data from approximately two million U.S. small businesses, rose one point to 141 in July. This uptick comes after a slight drop of four points the previous month, suggesting a steady recovery in small business spending.
Small businesses situated in tourist destinations, such as boardwalks and piers, have reported a significant increase in foot traffic, reminiscent of pre-pandemic levels. Tourists eager to indulge in experiences are spending generously on not just basic necessities, but also on premium offerings that provide unique and memorable experiences.
For instance, at the SkyWheel attraction in Myrtle Beach, sales have exceeded pre-pandemic levels and continue to operate above 2023 figures. The marketing manager, Sean Bailey, noted a shift towards online ticket purchases as visitors seek budget-friendly options without compromising on the experience. Additionally, there has been a growing demand for higher-priced experiences such as sunrise tickets or VIP packages, indicating a willingness to splurge on luxury offerings.
The U.S. Travel Association predicts that tourism in 2024 may surpass the figures of 2019, with approximately 2.45 billion trips expected. Domestic travel is rebounding faster than international travel, as local spending aligns closely with pre-pandemic standards. While affluent travelers seem unaffected by economic challenges, lower-income vacationers are more cautious with their spending, highlighting a clear differentiation in spending habits based on economic status.
At Navy Pier, Robin Harris, the owner of Confidence Apparel, has seen sales growth alongside increased foot traffic this summer. Customers are opting for quality purchases, focusing on products that they can use multiple times, reflecting a shift in consumer behavior towards intentional buying rather than impulse purchases. Items like $30 affirmation T-shirts and $75 jackets featuring motivational phrases have gained popularity among shoppers.
Similarly, Robert Gomez, who operates Beat Kitchen Cantina and Bar Sol, has noticed a significant increase in sales at his concession stand, with a 30% jump from last year. Patrons are willing to spend on items like $8 tacos, demonstrating a rising confidence and a desire to enjoy food experiences.
Despite the positive trends in small business spending, major construction projects in various U.S. cities present challenges for small businesses. Construction can limit accessibility and impact sales, but many savvy businesses have found ways to adapt to these challenges.
Business owners have expressed frustration with the lack of adequate communication prior to construction projects, with the Canadian Federation of Independent Business (CFIB) reporting that 72% of small businesses experienced disruptions from local construction projects. Many businesses were unprepared for the challenges they faced and called for improved planning and communication strategies from local governments.
The CFIB has criticized local governments for failing to compensate small businesses affected by extensive construction projects. They have emphasized the need for financial support during project disruptions and called for better planning and communication to mitigate the impact on small businesses.
Approximately 68% of small business owners believe they should receive financial compensation when public projects noticeably impact their operations. The economic losses due to construction disruptions can reach up to 22% of revenues, highlighting the significant impact on small businesses.
On the other hand, the Ontario General Contractors Association has highlighted different perspectives, stating that construction may not be as disruptive as perceived with efficient plans and clear communication. Their president, Giovanni Cautillo, emphasized the importance of transparency as construction progresses so that businesses can adequately prepare for any disruptions.
Addressing project timelines, the CFIB has called for stricter penalties for contractors who exceed predicted completion dates to minimize the prolonged hardships faced by local businesses. Despite these challenges, small business owners across various sectors remain optimistic about the future, as increased foot traffic and spending trends indicate potential for recovery and growth.
The economic divide observed among different consumer demographics raises questions about future stability for small businesses. Will they continue to thrive, or will shifting economic factors hinder their progress? It is clear that small business spending is influenced by more than just local economic health, with a mix of cautious spending and high aspirations dictating trends for these enterprises moving forward.
Broader economic indicators point towards rejuvenated consumer confidence and spending behavior, allowing small businesses to regain traction. However, industry leaders remain cautious about external factors such as inflation and construction disruptions that could affect their prospects.
Despite these challenges, small business owners have demonstrated remarkable resilience, adapting to swiftly changing consumer habits and economic challenges. How they navigate this growth could define their future success in the evolving economic landscape.