Over 2014, local businesses across the nation reported an average overall revenue growth of 8.1%, up from 5.3% last year. Arizona businesses seemed to do slightly better than the national average, reporting an average change in annual revenue of 8.5%.
The survey results suggest that the strength of the independent sector is owed partly to an improving economy and partly to the spread of the “buy local” movement. Businesses located in cities with active Local First campaigns reported sales growth of 9.3%, compared to 4.9% for those elsewhere (see chart). They cited a wide range of direct benefits from these campaigns, with half saying the initiatives had generated new customers and 45% saying they had resulted in more awareness and support among city officials. Nearly two thirds of businesses also reported that public awareness of the benefits of supporting locally owned businesses has increased this year.
National holiday sales at local stores grew too, by an average of 4.8%, beating the performance of many national chains and "coming in well ahead of the 0.9% decline in December retail sales reported by the U.S. Department of Commerce." Arizona businesses were on par with the national average with holiday sales growth of 4.9%. 63% of Arizona businesses reported that they saw an increase in their holiday sales in 2014.
An interesting fact that came out of the survey shows that independent retailers in communities with a Local First initiative (like Local First Arizona) showed a higher average of holiday sales growth than those in communities without a Local First initiative. Those with an initiative reported growth in holiday sales of 5.7%, and those without reported growth of 4.2% (see chart).
Despite these gains, ILSR says that independent businesses still face a decidedly uneven playing field. Competition from large internet retailers was the number one concern among Arizona businesses, as many are not required to collect and remit sales tax. As a local business owner with a brick-and-mortar location, we are automatically at a 8.1 percent price disparity because we are required to collect local sales tax,” commented a business owner in Arizona. The most important thing we can do to give local businesses a fair chance is to support Internet sales tax fairness legislation like the Marketplace Fairness Act. It has made considerable progress over the past few years in Congress, but has never been passed. Contact your representative to register your support for a level playing field!
The next largest challenges come from large brick-and-mortar chains, as Arizona businesses report that their direct competition and ability to leverage better pricing and terms put local businesses at a disadvantage. The best that we can do here is continue to think "Local First," whether you're a consumer or a business owner, we can all do our part to support local businesses and spread the word about keeping our dollars in the local economy.
Download the 2015 Independent Business Survey here. Read about the 2014 Independent Business Survey here.