KANSAS CITY, Mo. -- More than 85% of small business owners polled expect a change in revenue as a result of increased gasoline prices with most of them already feeling the pinch, according to a survey conducted on DollarDays.com throughout the month of May.
Meanwhile, a separate Gallup Poll shows more than half of consumer respondents said higher energy prices are causing them hardship, and 60% of are cutting back on their discretionary spending as a result of high gasoline prices, according to a report in The Kansas City Star.
According to the results of the poll by DollarDays, an Internet-based product wholesaler to small businesses and local distributors, 86% of its customers expect a negative effect on their revenue as a result of increased gasoline prices, with 71% already seeing a change; 83% said they are very concerned about how these prices will affect their bottom line; and 86% said it's getting harder to be a small business.
Gas prices are already outrageous, and we're headed into the summer and hurricane months where prices typically increase so it's no wonder that small business owners are worried, said Marc Joseph, president and CEO of DollarDays and author of The Secrets of Retailing or How to Beat Wal-Mart.
Survey results include:
31% of small business owners will have to lay off employees if their revenues continue to change, while 64% say they won't; 5% of employers are offering financial supplements to help their employees as a result of increased gasoline prices, while 93% aren't; 55% of the businesses will suffer if tourism decreases, while 43% will be okay; 71% of small business owners have changed their personal travel plans as a result of gasoline prices.Joseph encourages small retail stores to carry desirable and high-margin items to help increase profit.
For larger retailers, however, the results so far have been mixed. According totheStar report, Ann Taylor, J.C. Penney, Federated, Costco, Nordstrom and Target all posted better-than-expected sales for the month of May.
But discounting giant Wal-Mart, which caters more to lower-income customers than many retailers, saw same-store sales come in at the low end of expectations. Fuel prices continue to be a top concern for our customers, Tom Schoewe, Wal-Mart's executive vice president and CFO, said in a statement. We believe that our customers are consolidating their store visits and focusing their spending on consumables, a trend that we have been seeing since Easter.
Dollar General also said high gasoline prices, as well as higher interest rates and consumer debt levels, will affect its customers' spending in the next few months, particularly on discretionary purchases, which typically have higher gross profits.
Instead of cutting spending on clothing, shoes, jewelry, electronics, beauty services or other nonessential items, some shoppers seem to be cutting back on going out to eat, or trading down when they domeaning high-end diners are going to mid-priced operations, and fast-food fans are eating at home.
When you ask consumers what they are doing to combat higher gas prices, eating out less is one of the ways, C. Britt Beemer, founder and CEO of America's Research Group, a consumer-behavior marketing firm based in Charleston, S.C., told the newspaper. So I think the restaurant industry is probably even more at risk initially with $3 plus gasoline.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.