We’re doing business in interesting times, with retailers navigating tidal wave and drought-like conditions. With the pandemic in the rear-view mirror, inflation underway, and the 2022 holiday season upon us, how are small and midsize business (SMB) retailers faring? According to Verizon Business’ Third Annual State of Small Business Survey, retailers remain upbeat regarding their future, with 56 percent of respondents saying they will be better off a year from now.
Why is that? One reason is that 61 percent of those surveyed are innovating and adopting new tools and technologies to help drive sales, increase employee engagement, and improve the customer experience — all of this amidst industry-wide concerns around inflation, labor shortages, supply chain issues, and cybersecurity threats.
Heightened competition and the holiday season add to retailers’ concerns around the nation’s economy. According to the survey, 89 percent say they’re concerned about the state of the U.S. economy and nearly half say they expect it to get worse over the next few months (vs. 30 percent who expect it to get better). Looking ahead, 42 percent of retailers surveyed say their business is better now than in 2021.
How are SMBs addressing inflation? Many are planning to increase the prices of goods and services (62 percent), while others are looking to reduce non-essential spend (59 percent). Cutting back on planned operational and technology investments and scaling back on programs and business offerings, combined with using more free resources, will help businesses prepare for an economic downturn. Those looking for personalized learning and mentorship can turn to Verizon Small Business Digital Ready, a free resource for small businesses.
Savvy Retailers Large and Small Look to Innovate Amidst Competition and Inflation
Savvy retailers turn to technology to help them innovate and stay ahead. For instance, today’s local car wash, hair salon, Mexican restaurant, or baker, thanks to digital technologies like wireless internet, point-of-sale systems, and collaborative video conferencing, have had the ability to not just survive, but thrive. These retailers help drive customer acquisition and better connect with existing customers. Other ways retailers are competing:
- offering new products and services to adapt to customer needs;
- hiring more employees (more than half of respondents have done so); and
- delivering products or services differently.
2022 Holiday Season: Rough Seas Ahead
Approximately one in three retailers (35 percent) are worried that economic hardships and inflation will impact their holiday sales. With the 2022 holiday retail season upon us, these retailers (63 percent) are concerned about maintaining inventory levels and fulfillment schedules. As supply chain issues continue to plague retailers of all sizes, more than half of respondents say their business has experienced operational issues sourcing materials due to disruptions.
With businesses across the board preparing for the season ahead, nearly two in five respondents are worried about properly pricing goods and services to keep up with inflation, and 35 percent are worried about economic hardships impacting their holiday sales. Additionally, 58 percent are concerned about bouncing back to pre-COVID-19 business levels with the current, more cost-conscious public, as well as cash flow disruptions.
In addition to inflation and supply chain issues, SMBs continue to be leery of cybersecurity threats. Consistent with 2021, more than half of small retailers are concerned with viruses (55 percent), malware and ransomware (54 percent), sensitive data vulnerabilities (51 percent), password theft (51 percent), and spam and phishing (50 percent).
The Digital ‘Lifejacket’
Looking back, more than one-third of SMBs indicated that most of their sales during the 2021 holiday season were digital. Looking ahead, a similar number (34 percent) say they’re again preparing for a digital-first holiday season.
Despite their worries about the 2022 holiday season, most respondents expect their business to be doing better in 2023. While this holiday season may not be smooth sailing all the way, a solid technology platform will help keep retailers afloat and enable them to be successful on the voyage ahead.
Wendy Taccetta is senior vice president, small and medium business for Verizon Business.
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