Walmart, Amazon, and other powerful, well-financed companies have captured control over much of retailing. These giants maintain their extraordinary market position not by competing on the merits of their service. Instead, they exert their power as dominant buyers of food and goods to bully suppliers, extracting discounts for themselves while forcing independent retailers to pay more. This is threatening those small businesses, wounding competition, and hollowing out communities large and small. It’s a monopoly tactic we call “predatory buying.” In this report, we examine the history of these abuses, the law Congress passed in 1936 to protect independent businesses’ right to compete on fair terms, and the pro-bigness coup that stopped enforcement of the law in the 1970s.
Small businesses build local wealth, with benefits for nearly every aspect of the community and region. They offer a path to prosperity for hard-working entrepreneurs. They keep a larger share of their economic output within the community than businesses with outside ownership, putting that output to work to support schools, public safety, roads, parks, affordable housing, and many other vital public needs. And young, small businesses create the bulk of the nation’s new jobs. But one of the biggest challenges facing America’s communities is leveling the playing field for small businesses and intentionally moving away from the past decade’s Amazon-take-all trajectory. The $1.9 trillion ARPA provides America’s towns and cities with the money and encouragement to do so.
A city pandemic loan program intended to help out small businesses in lower-income neighborhoods and communities of color has left out a swath of Manhattan's Chinatown. In late November, the city's Department of Small Business Services launched a $35 million low-to-moderate income storefront loan program. Small businesses in certain neighborhoods could receive up to $100,000 in a zero-interest loan. The funds would provide loans for at least 350 businesses across the city, depending on the size of loans allocated. To qualify, businesses need to have fewer than 100 employees and be located in a low- to moderate-income ZIP code. But not all of Chinatown—a "hard-hit" neighborhood that was reeling from economic impacts from COVID-19 even before the city became the epicenter of the pandemic—was included.
Many Black and Latino business owners say they are on the verge of losing their businesses because they are currently out of work due to the coronavirus pandemic. However, that may not be the only reason because according to a new survey, these two minority groups have also been side-lined and are barely benefiting from the Paycheck Protection Program and other government aid efforts. The Paycheck Protection Program (PPP) is a part of the Coronavirus Aid, Relief and Economic Security (CARES) Act that is intended to provide some form of financial aid to small business owners who are finding it hard to function amid the coronavirus pandemic. Nonetheless, Black and Latino small business owners are on the losing end of the scale, according to the survey conducted by the Global Strategy Group for two equal-rights organizations, Color of Change and UnidosUS. From April 30 to last Monday, a total of 500 business owners and 1,200 workers were interviewed, according to the New York Times.
Banks have earned a quick $10 billion processing US government loans to small businesses affected by the coronavirus crisis, according to a new report. The $350 billion rescue program aims to funnel cash to small businesses distressed by the economic blows of the COVID-19 crisis. In two weeks, banks including JP Morgan, Bank of America, and PNC Bank vetted thousands of applications for federal loans of up to $10 million. Transaction charges start at 5% for loans under $350,000, reducing to 1% for loans between $2 and $10 million, according to NPR. The loans are guaranteed by the government, and the guidelines issued by the Treasury Department indicate that they require less vetting than regular loans. There is no risk to the banks which are merely the middlemen.
With allegations that major banks shuffled Paycheck Protection Program applications to prioritize larger loan amounts and bigger businesses, Main Street businesses are furious. This possibility points to a clear design flaw in the program that tried to use the private lending market, already rife with discrimination and putting profits over all, as the mechanism for small business relief. Small businesses are demanding that any new funding must come directly to them via subsidies, not loans, and it must prioritize those who were left out. Business owners of color are particularly vulnerable to discrimination in the lending system. A report from the Center for Responsible Lending shows that a large majority of minority owned businesses, including 95 percent of Black business owners...
A survey of small businesses and workers conducted by the Society for Human Resource Management published on April 1 finds that small businesses and workers are being hit hard by the COVID-19 crisis. Their findings reveal the real class divide in the United States in that those workers who are essential, such as those who work in construction, manufacturing, transportation, education, and food, have the highest rates of not being able to meet their basic needs because of the shutdown while professionals are less affected. This poll highlights the need to demand financial security for everyone during this time of necessary physical distancing. We need a moratorium on evictions and foreclosures, full coverage of health care by the government, higher pay for essential workers and adequate unemployment benefits for those who are unable to work.
European Chains Spur Further Grocery Consolidation, Squeezing Farmers, Workers, And Independent Businesses
European grocery chains are driving a new round of concentration in American food retail, as they race to buy up independent grocers or drive them out of business. In the most recent deal, Stop & Shop, a subsidiary of Dutch-based Ahold-Delhaize, announced it will acquire Long Island supermarket chain, King Kullen, America’s first-ever supermarket. Traditionally-dominant conglomerates like Ahold-Delhaize feel pressure to acquire more stores due in part to price pressure from German discounters, Lidl and Aldi. These chains, which have grown rapidly across Europe over the past two decades, sell primarily private label products and offer less selection than traditional grocers to drive up purchasing volumes and lower prices.
Durham, North Carolina, once famous for its “Black Wall Street,” is exploring a new strategy to preserve and grow local African-American businesses through employee ownership. One of four cities chosen to participate in the Shared Equity in Economic Development (SEED) fellowship program, sponsored by the National League of Cities and the Democracy at Work Institute (DAWI), the city is preparing to reach out to African-American business owners — particularly those approaching retirement age — to encourage them to consider employee ownership when planning their succession strategies.
If you want to understand “retail death” — and I’m using quotes here because the concept of buying and selling things is very much alive — all you have to do is look at one very specific street. In the ’90s, the stretch of Bleecker Street that snakes north through New York City’s Greenwich Village was home to dozens of independently owned bookshops, sex shops, antique stores, and framing galleries. But the death knell rang when the luxury fashion house Marc Jacobs decided to settle there in 2001, the year after the nearby Magnolia Bakery was featured in an episode of Sex and the City. Within the next 10 years, 44 of those original neighborhood businesses would close to make space for the chains and luxury boutiques that followed.
For decades Marjorie Kelly has looked for ways that businesses can better contribute to the good of society. In 1987, after getting a master’s degree in journalism, she founded Business Ethics magazine to showcase socially responsible corporations. But after 20 years as president and publisher, she sold the magazine. She had come to an epiphany: Encouraging individual corporations to behave better was an insufficient route to improving society. Significant change would require a shift in the ownership structure of business. Kelly’s 2012 book, Owning Our Future, lays out ways to expand democratized ownership models, including employee ownership. Research shows that when employees own the company, they make higher wages.
It’s national Small Business Week, and nearly 6,000 small businesses, ranging from construction companies to tech startups are planning to deliver an open letter to Congress tomorrow Wednesday, May 2nd calling on lawmakers to support the Congressional Review Act (CRA) resolution to block the FCC’s repeal. Small business owners will host delivery events at congressional offices across the country, where they will deliver the letter and host a short press conference about the impact of losing net neutrality on small businesses.
On April 17, the U.S. Supreme Court will hear arguments in a case on sales tax collection that could — long after online commerce has transformed the retail sector in the United States — finally give states the authority to require online retailers to collect sales tax. For years, state and local governments have watched as sales tax revenues have declined, and local retailers have watched as their online competitors have been allowed to play by a different set of rules. States’ options, however, have been limited by a 1992 Supreme Court decision — and subsequent inaction from Congress — that ruled that states can only require businesses with a physical presence in the state to collect state and local sales taxes.
In many U.S. cities, finding and keeping an affordable location has become a major challenge for independent businesses. Two years ago, we took an in-depth look at the issue in our report, Affordable Space: How Rising Commercial Rents Are Threatening Independent Businesses, and What Cities Are Doing About It. We examined what’s causing the problem — from real estate financing that compels developers to exclude independent businesses, to the declining supply of small spaces — and also outlined six strategies that cities were beginning to use to address it. Now, one of those strategies is catching on: Set-asides for local businesses in new development. It’s a strategy that requires developers to reserve, or “set aside,” space for small or local businesses in new construction, and it can help ensure that a built environment that’s suited to small businesses isn’t replaced with one designed for chains.
Lanning is widely recognized for her work. Even though she finds traditional economic development planners to be frequent adversaries, in 2014 the International Economic Development Council awarded her a Citizen Leader of the Year Award. She considers that a turning point in planners’ recognition of the value of local businesses. Arizona Business Magazine named her one of the 50 most influential women in Arizona, and the American Planning Association named her Distinguished Citizen Planner for her work on the reuse of old buildings. In November, at a conference of the nonprofit Business Alliance for Local Living Economies, for which Lanning is an incoming co-chair, Lanning told me of the sources of her passion for local business.