Store Front Business Index: It’s All Good In The Hood

Store front businesses are the heartbeat of the local economy – but do they all behave the same way? Are the business risks for the hair salon and local watering hole in the same city similar? Do they all hire for growth? And, do store front proprietors face the same ups and downs as their larger business counterparts? This quarter’s PYMNTS Store Front Business IndexTM, powered by CAN Capital, measures where these businesses are strong and where they need help. We also went to one of these store front communities to get their perspectives, from the front lines, so to speak.

Overview

The store front business is the heartbeat of the local community. And, the more vibrant these businesses are, the more vibrant the communities in which they operate are. Store front businesses represent approximately 37 percent of all small business establishments in the U.S., roughly 3.4 million. The Index measures their well-being. And, so far, in 2015, this subset of the small business community continues to do well, outperforming the GDP, which grew by 0.6 percent in the first quarter of 2015.

We found that after a slight slowdown in the first quarter of 2015, the growth of store front businesses is moving along at a pretty decent pace. We track growth as measured by the number of establishments, wages and employment. This quarter, our Index reflects a modest growth in the number of establishments compared to wages and employment. For example, the number of employees saw steady growth throughout the country at an average rate of 3.2 percent for the first quarter of 2015 compared to the growth in establishments, which stands at 2.4 percent. That tells us that store front businesses are adding to their rosters – and growing their businesses. That’s good for the local economies in which they operate, in addition to signaling the health of their own businesses.

Methodology

The Store Front Business Index measures the performance of local businesses, both retail and services. We track these businesses across all regions of the country and 8 business segments: eating establishments, professional and personal services, construction, remodeling and repair services, fitness clubs, and a wide variety of retailers.

The Index is a quarterly assessment of how well these businesses are performing based on three criteria: growth in new establishments, wages and employment.

Findings from the front lines

“Business environment is thriving. I have seen tremendous growth in my own industry.”

There’s no better way to understand how relevant our Index findings are than to talk to store front businesses themselves. So, the PYMNTS team interviewed seven small merchants in a local community in the Northeast to get their firsthand perspectives on a range of topics spanning financing, expansion plans, growth, employment and general business sentiment in their area.

We picked Warwick, Rhode Island, for our first series of interviews, a community that is sort of middle of the road — not experiencing extreme growth nor significant struggles. Excerpts from the interviews and the owners’ perspectives are highlighted and contrasted to the findings in the different sections of this Index.

“Business environment is thriving. I have seen tremendous growth in my own industry. After 24 years of renting, it made sense to start my own business four years ago and within a week, I had three employees and within a year, I had eight and within two, I had twelve,” said a salon owner.

The full Index and explanation of its findings can be found here.