Weaknesses and threats of small business, compared to its strengths and opportunities: what will prevail?

The Basque Country has lost a third of its retail stores in the last decade. The closure of neighborhood stores is causing a proliferation of empty premises, which diminishes the commercial attractiveness of previously booming areas. ‘For sale’, ‘for rent’ or ‘liquidation due to closure’ signs in the shop windows accompany lowered blinds in a multitude of neighborhood venues, empty due to the lack of generational relief, the difficulty of digitalization or the loss of customers, among many other factors.

However, the retail sales increased 2.9% in 2022 compared to the previous year, since the 0.4% drop in food products was offset by the 5.2% rise in other products and 7.1% in the automotive fuel sector. By province, retail sales rose 3.7% in Gipuzkoa and 3.2% in Bizkaia, while in Álava they fell by 0.1%.

Also, the employment in the sector of retail trade is still very important. Compared to the year 2021, it rose 1.7% in the Basque Country as a whole, according to data released this Wednesday by the Basque Institute of Statistics (Eustat).

eitb.eus has analyzed with the chambers of commerce of Gipuzkoa, Álava and Bizkaia the weaknesses and threats of the sector, as well as the strengths and opportunities that small businesses have:

Sector weaknesses

The high age The average number of people who manage the Basque retail sector makes it difficult for the business to adapt or evolve due to the technological gap or lack of interest in the face of a not-too-distant retirement. Their average age is 50 years. Around 70% of Basque commercial establishments are managed by a person over 45 years of age.

In many cases there is no management plan annual, with the definition of actions and objectives to be achieved. This leads to the fact that on many occasions, the business cannot carry out professional management.

The wage increases, energy, logistics and raw materials have notably decreased the margin on sales of businesses that have not transferred 100% of these increases to their final prices.

Many businesses do not have sufficient resources to face the investment necessary to renovate your facilitiesdigitize or face marketing campaigns.

In the Basque Country, only 14.5% of retail businesses sell online. 33% of businesses do not have any management software. Only 30% accept payment with mobile phones and 15.5% with bizum, according to data from the Euskadi Trade Observatory, Enfokamer.

Lack of reaction and adaptation to the changes that are taking place day by day, and that in a more or less near horizon entails the loss of consumers.

Likewise, working conditions in terms of hours, days off, salary, and social recognition make it scarcely attractive to work in the sector.

threats

The closure of shops is causing a proliferation of empty premises. In addition, population movements, an increasingly predominant aging population, the drop in birth rates and the consequent reduction in the population bring changes that affect consumption and way we consume.

Basque consumers are reorganizing the composition of their shopping cart. Family spending on commerce fell, while spending on leisure, hospitality and tourism increased.

The increase in the technology of the population weighs heavily. More than 86% of the population over the age of 15 use the Internet, 92% use WhatsApp and 53.2% have purchased online in the last three months.

Strengths

However, small businesses try to overcome these threats and overcome the weaknesses of the sector by highlighting its strengths. On the one hand, there is customer trust, which is an essential element in shaping a business strategy. 89% of Basque consumers believe that their trust in the trade in which they buy is high or very high. In this sense, personalized treatment, physical proximity allows them to better understand their interlocutor in order to adapt to their tastes and preferences. Putting the customer at the center allows them to be more than just a number, as stated by Olaia Arrieta (Álava Chamber of Commerce).

On the other hand, gentrification processes are causing a progressive substitution of local commerce by multinational chains. In this process, traditional stores are no longer as attractive to new tourists and visitors. Many bakeries, bars and grocery stores are forced to close to leave their baton to new, more affluent and avant-garde entrepreneurs.

In addition, they contribute to security and urban balance by participating in the structuring of the city through the creation of commercial hubs.

Opportunities

We must not forget the opportunities generated by the sector: environmental sustainability and the supply of local products; the use of messaging applications, such as WhatsApp, as a means of direct communication with customers and a potential sales channel; differentiation as a key competitive advantage to survive in today’s business environment; servitization, understood as a business strategy consisting of offering services linked to a product or to the client itself.

Responsible consumption

More and more companies are changing their protocols with the idea of ​​both attracting these new consumers and aligning themselves with the sustainable development goals. These actions must be communicated to consumers so that they are aware of the values ​​and commitment of the trade, including detailed information on the products and the sustainable measures implemented, with transparency and honesty.