Small Business Sales Down as Consumers Cut Back on Spending

By Mattea Vecera, Inc. (TNS)

Small business sales and visits are slowing down as consumers cut back on spending, according to the June 2024 Fiserv Small Business Index. From May to June 2024, sales decreased by 2.9 percent and transactions fell by 1.5 percent.

Small business retail is showing a similar trend. Eight of the nine subsectors outlined in the report experienced a month-over-month decline in sales; overall, retail sales have decreased by 3.3 percent and transactions by 0.8 percent compared with May.

This deceleration is driven in part by inflation, which is pushing consumers to seek deals and pull back on discretionary purchases.

PwC reported in February 2023 that 53 percent of consumers are holding back on non-essential spending as the cost of living rises.

Mindful spending and no-buy pledges have also become popular trends on social media, with users minimizing purchases of non-essential items. According to the PwC report, 15 percent of consumers stopped non-essential spending altogether.

In response, retailers across the U.S. have been rolling out price reductions to attract shoppers. Major retailers like Target, Walmart, and Aldi began offering these discounts earlier this summer to provide customers with some financial relief. Despite these efforts, many consumers continue to delay purchases, opt for more affordable store brands, and seek bargains.

Still, the Fiserv report offers some positive signs. Though small-business sales are decelerating, sales and transactions have increased from last year. Compared with June 2023, small businesses in the U.S. saw a 1.6 percent increase in sales and a 4.4 percent increase in transactions. In small-business retail, annual sales have grown at a rate of 2.4 percent, and transactions are 7 percent higher than last June.

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Small Business