Switchfast Blog: The Future of IT
How Large Corporations Are Influencing the Small Business Scene
Wednesday, July 07, 2010 by Matt Hymel
Established companies are getting impatient with consumers' lack
of spending and have drawn up some interesting ways to not only
bring sales but stir up the small business arena.
An article from the New York Times points out how
some companies are not only "offering unconventional promotions
meant to attract visitors to stores, but also to get them feeling
profligate". While profligate may be a strong term, there are
certainly executions from which individuals and small businesses
can greatly benefit.
Here are a few examples of retailer benefits:
- Toys "R" Us, according to NYT, is "asking consumers to create a
sort of grown-up piggy bank" and open a separate holiday fund that
would only be spent at their store. Come mid-October, the company
would add 3% to the account's present balance
- Office Depot is going a cheaper route - in an attempt to target
back-to-school shoppers and small business utility shoppers, it
will offer glue sticks, scissors, and other items for less than $1
and give away certain items like markers for free (no purchase
necessary, either)
- Staples hopes to benefit from offering items for 5 cents or 1
cent. This, accompanied by complimentary gift cards with purchases
of backpacks, doesn't expect to make Staples any money, but the
goal is to bring the customers in where they can make one stop for
all of their remaining supplies
While many of these deals are centered on the consumer, Sam's
Club is introducing a program that could facilitate an easier
avenue for entrepreneurs to lift off into small business space.
This policy, according to NYT, will "facilitate loans for shoppers
of up to $25,000, backed by the Small Business Administration."
The company began experimenting and testing the program back in
May. In the near future, they will start to market the loans to its
members nationwide. A financial company by the name of Superior
Financial Group will be managing the loans and offering lower
interest rates and discounts on application fees strictly to Sam's
members.
This is a risky move by Sam's Club to ignite spending in a
conservative economic time.
Over at BNET.com, blogger Carol Tice mentions
Sam's Club struggle to keep up with Costco and connection to
small-business circles (15% of Sam's business customers reported
they were turned down for a bank loan) as motivators to a loan
program.
The two risks involved on the part of Sam's Club include
partnering with a non-bank lender and the current high rates on
loan defaults.
While Sam's may have risks, small business owners now have more
options for financial support. As the NYT article points out, a
survey done by Sam's members revealed that "tight credit" was
partly to blame for a fall in net sales. Sam's Club hopes to
facilitate a solution by providing small business owners with money
to spend. We will have to see if entrepreneurs and owners find this
useful or if the Club's move is more risk than reward.
Until Next Time -
Matthew Hymel
Switchfast Technologies
Chicago IT Support &
Consulting
Rochester
IT Support & Consulting
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