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Sizing Up Small Business Saturday

Posted by: John Tozzi on November 28, 2011

President Barack Obama visits Kramerbooks for shopping with his daughters Sasha, and Malia, right, Saturday, Nov. 26, 2011, in Washington.

This year’s Small Business Saturday promotion appears to have boosted sales for some independent merchants. The event, started last year by American Express, offers shoppers $25 credits if they use their AmEx cards at local independent businesses on the Saturday after Thanksgiving. Vermont bookseller Josie Leavitt, blogging at Publishers Weekly, says she saw her AmEx charges double that day:

I think slowly the message is starting to seep in that it’s vital to shop at small businesses. It’s a little sad that American Express doing this promotion has had more of an immediate and positive effect on business than the Shop Local campaign has had. This got me thinking about the power of the message and the size of the voice creating the message.

I’m not a huge Amex fan, I don’t have one personally and they are expensive for retailers to process, but I loved this promotion.

The effort is intended to give Main Street retailers a boost between the post-Thanksgiving shopping frenzies known as Black Friday (for big box sales) and Cyber Monday (online deals). It’s also savvy marketing for AmEx and the other companies participating. It encourages more merchants to accept the cards and gives shoppers an incentive to pay with their AmEx cards instead of other cards or cash. (Likewise, Facebook is surely hoping that business owners who created free Facebook ads through the promotion will return as paying advertisers.)

By tying the whole thing to the idea of helping small businesses and keeping its own branding relatively unobtrusive, American Express got lots of other companies, business groups, and government officials (including the Small Business Administration chief) on board. (When was the last time you saw the Obamas take part in a marketing campaign started by Visa or MasterCard?)

American Express even hired Civic Economics, a research shop that traditionally works for local economic development groups, to examine what’s happened to local businesses over the past 20 years. Their study (PDF) suggests that locally owned, independent retailers’ market share in the U.S. has declined from 59 percent in 1990 to 48 percent in 2009. For restaurants, the drop is from 71 percent to 64 percent.

The Small Business Saturday promotion taps into the desire among some shoppers and merchants to emphasize local shopping, but it’s unlikely to reverse indie retailers’ declining market share. For all the hoopla, it’s unclear how much the day affects merchants’ bottom lines. (I have a query into AmEx for spending data and will update if I get it.) Shoppers may just choose to use their AmEx cards that day instead of other payment methods, and they may choose to make purchases on Small Business Saturday that they would have made anyway at another time, so even a one-day pop in spending may not translate into greater total sales over the course of the holiday season.

Still, to the extent that Small Business Saturday brings new customers into local stores and puts local businesses in the conversation about holiday shopping, it’s useful for businesses owners. As Leavitt writes, “It was heartening to see so many new faces on Saturday. People actually thought about what small business to go to and were happy to let us know they’d chosen us.”

(AP Photo/Carolyn Kaster)

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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