Small Business Saturday promotes benefits of spending locally

Photo | Lagniappe

Melanie Clark, owner of Big City Toys, hopes to see Small Business Saturday place the holiday shopping focus on locally owned businesses.

It’s widely known Black Friday has a significant impact on yearly sales for big-box stores and national retailers, but for small businesses in South Alabama and across the U.S. the day after and those that follow can be equally important to their bottom line.

Small Business Saturday (SBS) was created by American Express in 2010 as businesses around the country were struggling in the midst of the Great Recession. The idea was to redirect some of the post-Thanksgiving spending to local retailers, restaurants and shops. By most measures, it’s been a success.

According to an American Express survey, customers have spent an estimated $85 billion at independent businesses in the eight years since. In 2017, more than 108 million shoppers spent around $12.9 billion on Nov. 29 alone, a slight decrease from the $15 billion reportedly spent at small businesses during the 2016 SBS.

While the collective numbers can give an indication of national trends, they divide into smaller figures that can sometimes make or break an entire year for small businesses. According to the Mobile Area Chamber of Commerce, several local businesses have participated for years.

For entrepreneurs like Cindy Newman, who owns Oak Ridge Gifts in Mobile, SBS helps provide a strong start to the Christmas season. Newman said the store “participates heavily” every year to take advantage of the promotional opportunity.

“I can’t stress this enough, but the holiday season is absolutely important for us. It’s typically a huge influx of sales,” Newman said. “I think [organizers] realize what key players small businesses are within communities, and they know we can’t compete with the money that large box stores have for advertising and things like that.”

The Downtown Mobile Alliance (DMA) has also been involved with SBS since 2013, and spokesperson Carol Hunter said she’s seen the event get “bigger every year.” The DMA will be offering maps, information and refreshments outside its office on Dauphin Street at this year’s event, too.

Hunter said the growth of SBS has also mirrored an increase in the number of new, independent businesses downtown. She said six new retailers have opened in downtown over past several months, and told Lagniappe it’s “the first time that’s happened in years.”

However, the ultimate goal isn’t to prop up businesses with one really good day of sales. As the director of small business development for the chamber, Danette Richards said SBS is a perfect way to emphasize a yearlong message to “shop small” and “shop local.”

Richards said getting exposure is a challenge all new businesses face, but because smaller companies typically have a limited budget for advertising and a less-established brand, one crucial step to success is getting the word out about the business and drawing in customers.

While actual transactions during annual SBS events are vital for area businesses, she said, the exposure can be just as important. As the popularity of the annual event increases, Richards is hopeful it can grow into a year-round “shop small” movement.

“It’s got momentum” she said. “The other thing is, if you can get people out and into local businesses on that day, there’s a good chance you can get them to come back as well.”

It is worth noting that American Express limits its SBS packages to companies that accept it as a form of payment, but the chamber also hosts independent events to help small businesses. Over the past few years it’s organized “cashMOBs” at local businesses.

A cashMOB is a two-hour shopping event to support local small businesses in the Mobile area which includes complimentary hors d’oeuvres and cocktails. While free to attend, guests are asked to commit to spending at least $20 at that location. The next cashMob is scheduled to take place 4:30-6:30 p.m. on Thursday, Nov. 29, at the Urban Emporium on Dauphin Street.

Local shopping trend

The death of mom and pop stores was a frequent topic of think pieces, news articles and dinner table conversations in the ‘80s and ‘90s, but over the past five years it’s been the national chains that have had to downsize, restructure and, in some cases, shut down altogether.

While business for brick-and-mortar retailers has stabilized, there’s no doubt the rise of online shopping and the shifting expectations of younger customers have forced local companies to adapt. In that changing landscape, it’s been easier for smaller businesses to carve out a niche for themselves.

One of the bigger names to face financial troubles recently is Toys “R” Us. The once dominant retail toy store filed for bankruptcy in late 2017, but has since backtracked on those plans in favor of a nationwide restructuring of its assets. During the transition, though, the company’s prominent store in Mobile saw its doors shut permanently.

While she doesn’t celebrate the closure of a store she described as a “staple of [her] childhood,” Melanie Clark — owner and proprietor of Big City Toys on Old Shell Road — said the gap it created in the local market may put her business in a good position heading into what is undeniably the most important time of the year for retail toy sellers.

“Until now, [Toys “R” Us closing] has actually kind of negatively impacted us because there was a lot of liquidation, and I think people were shopping the sales. It remains to be seen what fourth quarter might do,” Clark said. “We don’t like to see a negative thing like that happen, but I’m trying to turn this into a positive. We’ve really tried to get our name out there so people keep the money in Mobile locally rather than shopping online or with bigger retailers outside the city.”

Don Mosley, director of the Melton Center for Entrepreneurship and Innovation at the University of South Alabama, said gaining local support may be easier today than it was just a decade ago. He said the climate for small business has been shifting in a positive direction over the past few years.

According to Mosley, a new enthusiasm for shopping locally has been driven by a younger generation of shoppers who are often willing to pay more for a product in exchange for more personalized service. Mosley also said younger generations tend to think more about the broader impact of their spending than older shoppers do.

“[Millennials] tend to look at the impact they can have within the community, and that often translates into their spending as well,” Mosley said. “Coming out of the recession, I also think our society is also starting to recognize the vast majority of businesses are small.”

While Mosley said larger businesses and industries are vital for a healthy economy, he said small businesses may be more important because of the jobs and economic impact they create. He compared smaller, local employers to “the sand between the big marbles in a jar.”

However, it can be nearly impossible for small retailers to compete with big chains on price because they aren’t able to purchase items on such a large scale. Mosley said thriving small businesses have learned to differentiate what they offer customers by incorporating products from local vendors or more unique products. It can also be seen in terms of customer service and the shopping experience.

“Today, people are not always looking for the cheapest option,” he added. “Sometimes you’re looking for the better all-around experience.”

That “experiential” shopping idea has been a big part the business plan at Big City Toys. In fact, Clark said a lot of her motivation for opening the store in 2015 was a “dissatisfaction” with big-box and online shopping for toys. She wanted her two children to have toys that contributed to their development and weren’t “cheap” and “plastic.”

Clark said she had a hard time finding quality toys locally, and filling that need has driven a lot of what customers will find at Big City Toys today — a knowledgeable staff, hands-on toy displays and an inviting atmosphere that feels more like a place to play than a place to shop.

“You can’t get somebody at Target who is going to show you how a toy works or direct you to sensory toys and have the knowledge of those individual products,” Clark told Lagniappe. “We have a toy lab with all sorts of demonstrations and games sitting out to play with. We do a weekly story time. Some of it’s unique, but I think that’s what makes it work.”

At Oak Ridge Gifts, Newman said one of the ways she tries to set her store apart is by using local vendors, which she described as a “win-win” for both the business and the community. That type of support for local vendors is one of the ways shopping local benefits the local economy.

A 2010 study conducted by Michigan State University’s Center for Community and Economic Development concluded for every $100 spent at local businesses, $73 stays in the local economy. When the same amount is spent at nonlocal businesses, that figure is reduced to $43.

While some customers will always shop for the lowest price, Mosley said he thinks Americans — and more specifically Mobilians — are starting to realize the benefits of paying a little more to support retailers in their backyard.

“I think most people understand that when dollars are spent with individuals who have a single unit in a community or multiple units in the community, that money stays here,” he said. “Whether it’s through hiring additional employees, purchasing supplies from local vendors or giving back socially in the local area, that money stays here.”

Small businesses have also been assisted by the advance of technology, which has made many things more affordable that were once only accessible to larger businesses. For instance, point-of-sale applications like Square Inc. can now be installed on a standard tablet computer and can track customer spending habits and provide instant insights about what’s selling and who’s buying.

It’s also become much easier for small-business owners to set up online stores, whether they’re building their own standalone website or using one of a number of template services available. At Big City Toys, Clark said having an online store has helped bypass spatial limitations and appeal to those who are accustomed to shopping online.

“I know I shop at 11 o’clock at night sometimes, but if I can do that shopping with a local store, to me that’s a no-brainer. So we try to accommodate both,” Clark said. “I would say the majority of what Toys “R” Us could get, we can get, too.”

However, technology wasn’t always a benefit for small business. Alabama’s physical businesses struggled for years to compete with online retailers because the state had yet to develop a system of collecting taxes on internet purchases. However, that changed when the Simplified Sellers Use Tax Remittance Act (SSUT), or the “Amazon Bill,” took effect in 2016.

Nancy King Dennis, director of public relations for the Alabama Retail Association (ARA), credited the passage of the SSUT as one of the reasons retail sales have been trending upward, adding that ARA has so far recorded steady increases throughout each month of 2018.

The positive trend has led to an optimistic “holiday sales prediction” for the months of November and December. Overall, ARA expects a 4.5 percent increase in sales throughout the season.

“Because of the Simplified Sellers Use Tax Alabama already had in place and the enforcement of the state’s economic nexus rule, which began Oct. 1, Alabama retailers should now be able to compete with all retailers on price and shopping experience,” Dennis wrote via email. “We expect Alabama retailers to see higher sales in part because of the progress made toward ending the unfair tax advantage out-of-state, online-only businesses had over local businesses.”

Community engagement

Other than the economic impact, Mosley said small businesses are able to give back to the local community in more acute ways because they are part of the community. He said smart business owners realize the benefits of getting involved and contributing to their communities.

“Think about the amount of community support you see from someone like Palmer’s Toyota, Goodwill Easterseals or what Will Fusaiotti has done with Foosackly’s,” he said. “When you spend money in your local, small business, they put money back into the community because they understand that in order to be successful as a business, the community has to be healthy.”

Since she opened Oak Ridge Gifts, Newman said she can’t think of many requests she’d deny, whether it’s donating items for charity raffles, helping send kids to church camp or raising money for local residents battling cancer.

She says customers have indicated that type of support keeps them coming back to Oak Ridge, but while that’s good for Newman’s business, she said that’s not really the point.

“Either way, we’ve done the right thing,” she said.

Clark said the same is true at Big City Toys, which regularly donates to local toy drives and actually started a “tree drive” last year after a few Christmas trees were stolen outside of the storefront. Clark told Lagniappe “someone must have really needed those trees.”

That type of community involvement is something the Mobile Area Chamber of Commerce encourages businesses in Mobile to incorporate as they are able. Aside from having a positive impact in the community, Richards said it’s ultimately good for business as well.

“People tend to buy from people they like and trust,” she added. “That’s how you get them to come back.”