According to a recently released report, thriving independent business communities have seen increased real estate home values and greater job support than their neighboring cities.
The American Express OPEN Independent Retail Index, an analysis of the impact of America’s independent businesses on a national, city and neighborhood level, studied 27 neighborhoods where independent businesses have thrived in 15 major U.S. cities. In those neighborhoods, home values outperformed their broader markets by 4 percent per year and 50 percent cumulatively over the past 14 years—and, on average, saw an additional 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 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. Indexing highest among the 15 selected cities were New York, San Francisco, Boston, Washington D.C. and Philadelphia.
- 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.
Trends by business type
While some neighborhoods have fared better than the national average, across the country as a whole, there have been declines for independent retailers and restaurants. In the retail category, the percentage of market captured by locally owned independent businesses declined 11 percent, from 59 percent in 1990 to 48 percent in 2009. For eating and drinking establishments, percentage of market for independent businesses dropped from 71 to 64 percent over the same period.
However, there are also some encouraging trends, including:
- 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.
- 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.
“Our study shows there is no single formula for success–any U.S. city can nurture a vibrant small business community,” said Sobbott.
This study was prepared for American Express OPEN by Civic Economics, an economic analysis and strategic planning consultancy.
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