When you hear the words “small business,” Facebook, YouTube, FedEx and American Express aren’t typically companies that come to mind. But this year all four of them are promoting shopping at small retailers for “Small Business Saturday,” the mom-and-pop counterpart to Black Friday.
The day was dreamed up last year as a way to spur gift-buying at neighborhood stores by American Express — a credit card some business owners have been reluctant to accept because of its comparatively high merchant fees. As an incentive to shop on November 26, the credit card company is offering a $25 credit to customers who spend $25 at a small retailer that day.
“Small Business Saturday is really a day to celebrate everything we love about small businesses — they’re the familiar face across the counter and they’re really what make communities vibrant,” said Mary Ann Reilly, senior vice president at American Express OPEN. “The idea was to sandwich it between Black Friday and [unofficial online shopping day] Cyber Monday to give it a rightful place in the kick-off to holiday spending.”
A number of other big businesses have also pitched in. YouTube is providing a geo-coded hosting platform on which small business owners can create videos about their shops. FedEx gave $25 American Express gift cards to the first 30,000 customers who liked their Facebook page on November 1. Facebook serves as the hub for the initiative, offering a trove of marketing tips for merchants and ways to “get involved” for customers at facebook.com/shopsmall. Facebook and AmEx gave away free $100 Facebook ads to 10,000 businesses, and the number of people who “liked” the page doubled since last year, to 2.4 million.
“Facebook presents a great opportunity for businesses to create an ongoing two-way relationship with consumers,” said David Fischer, Facebook’s vice president of advertising and global operations. “Businesses have the ability to leverage those connections every day, not just on Small Business Saturday.
The holidays aren’t always as flush for smaller shops as they are for large retailers in part because they’re frequently positioned outside of shopping malls, thus limiting their ability to ride on the coat-tails of big box stores with red-tag sales.
“Normally when people think about big sales, they run out to malls,” said Lisa Duperier of Washington’s Adams Morgan Main Street business group.
To combat that effect, AmEx is encouraging small retailers to hold events and offer promotions on Small Business Saturday, touting the allure of specialty gifts that larger stores may not have.
In Adams Morgan, Duperier said groups of local shops will set up displays with themes like “looking good in wintertime.” One store, Turquoise Jewelry Boutique, is giving away free earrings to anyone who spends $26 — in honor of the date, of course. In SoHo, New York, a meanswear boutique called Palmer Trading Company is inviting an acoustic guitar player and giving out hot cider.
“It’s a different kind of shopping,” Duperier said. “Small Business Saturday encourages people to get out and walk, shop and eat in a neighborhood setting.”
The campaign’s online “merchant toolkit” aims to help business owners take their marketing digital, as well. (“Small businesses tend to be behind in digital adoption,” Reilly said.) Through the Facebook page, small businesses can create signage, learn how to make a Facebook page and beef up their Twitter presence. The site also provides templates for creating promotional YouTube videos — even helping business owners with the script. (“Scene 4: 13 to 28 seconds: What is your customer service philosophy?”) Nearly 300 business owners have already uploaded videos.
Tamatha Grabin of Buffalo, Wyo., is using the tools to promote her company, Baby Riddle, ahead of her first big holiday shopping weekend. She said the video component was especially important because her business is a bit difficult to explain — her company allows expectant mothers to send in an ultrasound, choose baby clothes for both genders and receive a “surprise” box with the items for the actual gender on their due date.
“It’s such a new business concept,” Grabin said. “I just thought that if people can see who you are, it helps in the trust factor. And it’s good exposure for my business.”
In some ways, American Express and crew are plugging in to a popular segment of the commerce world. A July poll by American Express OPEN found that 73 percent of customers said they consciously shop at small businesses in their communities. And nearly half of Americans said small business owners have high ethical standards, compared with only six percent of those who say the same about CEOs of major companies, according to a Public Affairs Council poll released last week.
“There’s an increased prominence to the buy-local movement,” said Mike Lubansky, a senior analyst at financial information company Sageworks. Lubansky points to the sudden burst in retailers opening pop-up shops and smaller local branches as evidence of the shop-small trend.
But while the popularity of small businesses may be booming, their sales are mixed. Sageworks found that privately held retailers, of which more than three-quarters are small businesses, have seen larger gains in sales this year compared with publicly held retailers. However, sales at smaller stores were also harder hit in 2009, so they had a further climb back up.
A quarter of small business owners reported that poor sales were their biggest problem in an October report by the National Federation of Independent Business. That study also found that 12 percent more small business owners said their sales are falling than said they were rising.
According to AmEx’s figures, last year’s Small Business Saturday was hugely successful. AmEx said sales at small businesses who accept the credit card saw a 28 percent increase on Small Business Saturday last year compared to the Saturday after Thanksgiving in 2009. The company is allowing 100,000 more people to sign up for the $25 credit this year than last year, bringing the total number to 300,000. Its survey showed that 89 million people plan to shop at small businesses on November 26 this year.
The partnership between AmEx and small businesses is a bit unusual, however, since many small companies have long grumbled over the card’s high merchant fees, and some don’t accept AmEx because of it. AmEx’s average weighted merchant card fees are 2.29 percent, according to consumer payment research company the Nilson Report, compared with 2.02 percent for Visa and Mastercard and 1.88 percent for Discover.
“High-end places are much more likely to take AmEx cards,” said NFIB chief economist Bill Dunkelberg. “The bigger stores that are having high-ticket sales can more easily cover the AmEx exchange fee.”
Kassie Rempel, who owns the Washington accessory store SimplySoles, said she stopped taking AmEx for a brief time during the recession in order to save money on the merchant fees. While Rempel said she’d rather AmEx lower its fees than give customers a one-time credit, she’s glad the company is promoting small enterprise and expects stronger sales this year because of the campaign.
“I think that small business owners understand the financial impact of accepting American Express, but this campaign benefits everyone, whether or not you take American Express,” she said. “That’s why there’s so much substance to it.”
Reilly said American Express card members also spend three to four times more than the average consumer and that the company “pumps a lot of resources into this program in support of small businesses.”
If it succeeds, Dunkelberg said the campaign could boost sales for big businesses, as well. After all, Toyota makes cars, but those cars are all sold in dealerships, which are small businesses.
“If these consumers go out and spend, everyone’s going to benefit,” he said. He added that in a time of crunched consumer finances, though, Small Business Saturday will only work if shoppers don’t spend all their money on the previous day: “any-business Friday.”