The Shop Local Initiative: The Thing About Demographics

This blog is the third in an ongoing series of featured posts on Shop Local initiatives in the United States. In this post we talk about demographic shifts and how shop local activities need to move with the times.

Over the past few years there have been many changes to the landscape of small business. For example, from 2007 to 2012 the percentage of business owners age 50 and older rose five percent to 51% while business owners age 35 to 49 fell from 39% to 33%. The majority of small business owners are getting older.

In addition, a study by Pew Research Center cited that only 65% of adults aged 50 and above use social media. That means that 35% of older adults have never used social media before in any capacity.  Small business owners are getting older and are less likely to engage in social media.

In the meantime, a large portion of today’s customers are Millennials (people born from the early 1980s to early 2000s). According to Oracle, Millennials will spend $2.45 trillion in 2015 and that by 2018 they will have surpassed baby boomers in spending with $3.39 trillion. Millennials are also relying more heavily on mobile to make their purchases. According to Edelman Media, 41% of them make purchases on mobile devices. For Millennials, the smartphone has become the new hub of shopping.

Making matters more complex, Millennials are not as susceptible to advertising as previous generations. A staggering 48% of Millennials rely on casual conversations with friends, view postings on social media such as Facebook, read shout outs on places like Twitter, or just 'google' names on the internet before purchasing a product. Sixty-two percent of Millennials actually want to engage with the brand on social networks (alas, not so much for the older generations).

According to Forbes, this hyper-social behavior creates extreme brand loyalty. Social media is an important part of advertising and promoting business. Not using it for your small business puts you at a huge disadvantage in today’s competitive market.

However, not many small businesses are ready to take advantage of the spending power of the Millennial demographic. According to the Small Business Association, 93.3% of small businesses websites are not mobile compatible. This makes it difficult for the average Millennial to shop for your goods on their mobile device.

While you are digesting those numbers, think of the other struggles the small business demographic is facing. More than 22 million of the 28 million small businesses in the U.S. are self-employed and have no additional employees. They are known as non-employers. These individuals form about 75% of all U.S. businesses and are continuously growing with approximately 543,000 new businesses starting each month.

However, this growth is not necessarily a positive sign as more small businesses shut down than start up each month. The new businesses that are popping up are essentially just replacing the ones that have closed down.

Forbes pointed out that 7 out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Half of all new businesses tend to close down after 5 years, which is not a sustainable number for a continuously evolving economy. These businesses shut down for many reasons including competition, lack of sales, lack of awareness, and, most importantly, lack of customers. Larger e-commerce companies are kicking out these small businesses by creating better deals or a better convenience!

So how can small businesses make themselves more attractive to Millennials?

First, they need to get online.  According to the marketingtechblog, 8 out of 10 small businesses do use social media to drive their business and gain new consumers. Digital is becoming a crucial part of the shopping experience and businesses need to be in position to engage consumers where they want and at any time they want.

Second, they need look for a cost effective way to create a mobile presence.  Many small business owners simply turn away from going online because it is too complicated or it is too complex or they think local foot track will keep them going.  By engaging online, small businesses will be able to further their sales, increase awareness among the Millennials, and remain competitive.

The one constant in this world is change.  Today's demographic is tomorrow's statistics. Small businesses need to continue to react and evolve to their ever-changing customers and a solid online and social media presence is a great way to keep up with your demographics.

Sources:
http://www.forbes.com/sites/jasonnazar/2013/09/09/16-surprising-statistics-about-small-businesses/
https://www.americanexpress.com/us/small-business/openforum/articles/small-business-owner-demographics-are-changing-sba-report-says/
https://www.sba.gov/content/demographics
http://www.pewinternet.org/data-trend/social-media/social-media-use-by-age-group/
http://www.forbes.com/sites/danschawbel/2015/01/20/10-new-findings-about-the-millennial-consumer/2/
https://smallbusiness.yahoo.com/advisor/22-shocking-stats-millennials-help-chart-tomorrow-change-112531305.html
https://www.marketingtechblog.com/2014-statistics-trends-businesses-social-media/
http://www.slideshare.net/DataNCharts/slideshare-online-vs-offline-word-of-mouth-what-drives-consumer-purchase-decisions

#shoplocal #smallbusinesssaturday #pixiboard       

About the Authors

 Sean Brown is the Founder of Pixiboard and an advocate for making local commerce safe and seamless for buyers and sellers alike.

Barisa Abidin is a marketing intern at Pixiboard and a senior at University of San Francisco