Winter storms battered sales of small businesses, survey shows
As snow piled ever higher last month, sales slumped dramatically for retailers, restaurants, and other small businesses in Massachusetts, according to a survey by several business groups.
The poll of more than 1,600 companies found sales fell an average of 24 percent between Jan. 26 and Feb. 22, compared with the same period a year earlier. Retailers and restaurants were hit hardest by the weather, with sales falling nearly 50 percent, according to the survey.
Bob Luz, chief executive of the Restaurant Association of Massachusetts, said that unlike car or toaster sales, which consumers merely postponed until the snow clears, restaurant sales “go away and never come back.” One storm hit on Valentine’s Day, leading to thousands of canceled reservations on what is typically one of the biggest nights of the year for restaurants.
“All business was hit pretty hard this winter,” Luz said, “but restaurants were hit particularly hard.”
Employees also lost money when businesses were forced to close. Payrolls dropped an average of 7 percent, according to the report, and 14 percent for retailers and restaurants.
The survey was conducted by the Retailers Association of Massachusetts, Associated Industries of Massachusetts, and the Massachusetts chapter of the National Federation of Independent Businesses, the small business lobby. About 77 percent of the businesses surveyed had annual sales of less than $5 million, and 61 percent had fewer than 20 employees.
The groups are using the survey to urge state lawmakers and policy makers to consider ideas that would lower business costs or improve sales, from a sales tax holiday to delayed tax filings to more parking.
Data collected by an Atlanta company that processes credit card transactions also show the storms’ impact. Spending at retailers during the four weeks starting Jan. 24 fell more than 9 percent from the same period a year before, according to First Data Corp.
Spending on bulky big-ticket items plunged as consumers balked at the prospect of moving large items over snowbanks and slippery sidewalks, First Data said. Spending at furniture and home furnishing outlets fell 14.7 percent.
The only real winner? Grocery stores. Bostonians rushed out to stock up on food before the storms, according to First Data, which said that spending at grocery stores and other food and beverage retailers was up about 8 percent over last winter.
Many businesses could make up losses later in the year as consumers make purchases they delayed. During the first three months of 2014, when bitter cold from the so-called polar vortex descended over much of the nation, the US economy contracted at an annual rate of 2 percent. But a strong rebound followed, with the economy expanding at a rate of about 5 percent in each of the next two quarters.
This winter, economists estimate the drop-off in consumer spending, missed days at work, and transportation delays cost Massachusetts more than $1 billion in lost business activity. The losses are sizable enough to reduce the local economy’s output by about 1 percentage point during the beginning of 2015.
Bill Vernon, state director of the National Federation of Independent Business, said smaller retailers tend to lose sales because sometimes consumers decide to go without an item. After the storms, small retailers continued to lose sales because of transportation issues, such as a lack of train service and parking.
“This interrupted the recovery,” he said. “Small businesses were growing again and the confidence was there, the consumer confidence was back, and small business were starting to feel good again. This definitely interrupted it.”