NEW YORK--(BUSINESS WIRE)--Neighborhoods with thriving independent businesses saw home values outperform citywide markets by 50 percent over the last 14 years. Those same neighborhoods also benefitted from strong hiring at small, independently owned businesses. The American Express OPEN Independent Retail Index, conducted by Civic Economics, analyzes America’s small businesses on a national, city and neighborhood level. It shows the benefits to communities that support local independent shops and analyzes the economic vitality* of locally owned retail businesses, dining establishments and bars over the past two decades.
The report studied 27 neighborhoods where small businesses have thrived in 15 major U.S. cities. It found that home values in these neighborhoods outperformed their broader markets by 4 percent per year and 50 percent cumulatively over the past 14 years. The “indie hotspots” in the 27 neighborhoods support an average of more than 1,800 jobs at independent retailers, restaurants and bars.
“This research validates what we know intuitively—that small businesses are the lifeblood of our communities,” said Susan Sobbott, president, American Express OPEN. “There is concrete evidence that thriving independent neighborhoods lead to higher real estate values and more local jobs.”
How 15 US Cities Fared
The American Express OPEN Independent Retail Index charted and ranked the performance of independently owned retail and eating and drinking establishments in 15 of the largest U.S. cities over the last two decades. [A detailed Fact Sheet is available for each of the cities surveyed.]
“Our study shows there is no single formula for success–any U.S. city can nurture a vibrant small business community,” said Sobbott.
The survey ranked 15 pre-selected major cities in terms of the vitality of their small business sector in both the retail and eating and drinking sectors. The index reflects the performance of a city’s independent business sector relative to the national average (An index score of 200 equals the national average in 2009):
|1. New York||287|
|2. San Francisco||250|
|3. Washington, D.C.||238|
|7. Los Angeles||213|
|12. San Diego||184|
Independents Faced Challenges Over the Past 20 Years
Not surprisingly, the study showed independently owned retailers and restaurants have lost some of their percentage of the market since 1990. While independent bars and restaurants registered a solid 64 percent of total sales in 2009, that’s down 7 percentage points over the past 20 years. And, while small retail establishments accounted for nearly half (46%) of total retail sales in 2009, that’s down 11 percentage points over the past 20 years.
In addition, the report identified many encouraging trends:
- Independent full-service restaurants have held onto their relative position and retain strong support among dining consumers;
- Local bars and taverns of all kinds remain strong;
- Independent grocery stores have kept pace with overall industry performance, and have seen a modest uptick in the last decade;
- Local clothing stores have staged a healthy rebound in recent years; and
- Furniture stores and the sector that includes sporting goods, books, music, and hobby shops have maintained a high percentage of the market throughout the study timeframe.
“Small businesses are resilient but they face headwinds in this uncertain economy,” said Sobbott. “If consumers commit to ‘Shopping Small’, we can provide Main Street with an important boost at a time when they need it most. According to the Small Business Administration, small businesses accounted for 64 percent of net new job creation in the past 15 years, and more business in our local communities will drive more hiring in the neighborhoods where we live.”
Cities’ Strengths and Opportunities Vary
Noteworthy findings include:
Hotbeds of vibrant independent businesses are New York, San
Francisco, Boston, Washington D.C. and Philadelphia
– these five cities consistently ranked high in both retail and eating
and drinking categories:
- New York came out on top overall and has the most vibrant independent retail businesses;
- Washington, D.C. and Philadelphia ranked above the national benchmark for both retail and eating and drinking establishments;
- San Francisco’s independent eating and drinking establishments actually grew their percentage of the market during the study period.
- San Diego, Minneapolis, Dallas, Phoenix and Atlanta consistently ranked below the national benchmark for both retail and eating and drinking establishments;
- While Miami has the second-most vibrant independent business community for retail, the city fell below the national average for eating and drinking establishments;
- Los Angeles has strong independent retailers, but its independent eating and drinking establishments are a smaller part of the local economy compared to the national benchmark;
- Chicago was among the leading cities for eating and drinking establishments, but dropped to the near bottom for retail;
- Seattle also has a healthy independent business community for eating and drinking but its independent retail ranked below the national benchmark;
- After suffering substantial erosion, Detroit’s percentage of independent retailers has leveled off in the past decade. However, its percentage of independent eating and drinking establishments fell below the national benchmark.
The American Express OPEN Independent Retail Index is based on the most recent National Establishment Time-Series Database (NETS). NETS is built from the business dataset compiled by Dun & Bradstreet (D&B) from 1990 to 2009.
This study was prepared for American Express OPEN by Civic Economics, an economic analysis and strategic planning consultancy. Civic Economics procured from Walls & Associates a subset of NETS, which comprised of 1.4 million establishments (an establishment is a single storefront location) in retail and food and beverage sectors. Each of those businesses operated at least one year in at least one of the counties used to produce a representative sample of the American retail marketplace. The sample was comprised of 145 counties. Fifteen major cities were identified in advance of the study, including a total of 19 counties. The remaining 126 counties were randomly selected within six groups defined by population and metropolitan area status.
To produce a representative national sample for benchmarking purposes, Civic Economics weighted county data twice: once within the six classes and again among the six classes of counties. The size of the sample, nearly 20 percent of the national population, provides a valid basis for analysis. The stratified weighting within the sample allowed the development of a representative national benchmark.
To measure the changes in home values provided by a thriving independent business community, Civic Economics identified relevant zip codes and used Zillow.com to download data on the median sales price of residential properties in those neighborhoods. Employment figures were drawn from the same NETS database as revenues.
About American Express OPEN
American Express OPEN is the leading payment card issuer for small businesses in the United States and supports business owners with products and services to help them run and grow their businesses. This includes business charge and credit cards that deliver purchasing power, flexibility, rewards, savings on business services from an expanded lineup of partners and online tools and services designed to help improve profitability. Learn more at www.OPEN.com and connect with us at openforum.com and twitter.com/openforum.
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at www.americanexpress.com and connect with us on www.facebook.com/americanexpress, www.twitter.com/americanexpress and www.youtube.com/americanexpress.
About Civic Economics
Civic Economics is an economic analysis and strategic planning consultancy with offices in Austin and Chicago. Founded in 2002 by Matt Cunningham and Dan Houston, the firm has earned a national reputation for innovative approaches to economic development challenges. Learn more at www.CivicEconomics.com.
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