Onion River Sports owner Andrew Brewer has announced that he is planning on closing its doors for good after 18 years of ownership. The store, located in Montpelier, Vermont, is considered part of the community for having kept its doors open for nearly two decades.
The closing of the store is the result of three reasons: dealing with financial troubles, losing market share to larger retailers with an online presence, and being in a long legal battle.
In regards to the number of jobs that will be lost or the timing of the store closure, neither was mentioned.
Was the Onion River Sports Closure a Surprise?
No. There have been a lot of changes in customer behavior with regards to purchasing retail sporting goods. In addition, there have also been changes in the manufacturers’ methods of selling these goods to customers.
Consumers are purchasing more of their goods through companies with an online presence, as they value their time a lot more and enjoy the convenience. And by purchasing goods online, it means customers are paying the same price and getting the same goods, all without needing to leave the house.
Also, customers are found to continue to use very large companies that sell pretty much everything from customer staples to discretionary products; everything they need can be purchased in one shot. Since small retailers only specialize in selling goods related to one segment of the market, it results in customers looking for larger retailers to fulfill their orders. Another reason for loyalty to larger retailers is that customers earn reward points on each transaction processed.
Regarding the manufacturers of the goods, they are looking to work with larger retailers because it would ensure they actually get paid their future payments. This is a concern because smaller retailers normally purchase goods from manufacturers using credit. Working with larger retailers helps lower the overall risk for the manufacturer and strengthens its overall financial stance.
Also, manufacturers are making their presence larger by delivering directly to the end customer. This removes the risk of using the retailer as a middleman in order to connect to the end customer.
The Future of Small Businesses in America
The future does not look bright for small businesses in America. Roughly half of the owners are baby boomers—individuals between 53 and 71 years of age—which is important to note because it is estimated that 80% of small businesses do not have a plan for the future of the business. If these business owners decide to retire, or perhaps unexpectedly pass away, the business may be forced to shut its doors due to a lack of a contingency plan.
This part of the market accounts for approximately $5.1 trillion in sales and employs more than 24 million Americans—numbers that could dramatically shrink in the future. Onion River Sports would be included in these figures.
The dramatic changes seen by almost all industries because of the Internet is yet another major concern. Larger companies will have larger bank accounts and could invest more quickly to ensure their businesses remain relevant. The same can’t be said for small business owners; they will have a much more difficult time adjusting to any changes in their respective business environments.
What we could see is fewer small businesses operating and more large retailers with greater market shares. This is great news if you are a shareholder of a major retailer with a large presence or an employee of one such company. However, there is a much bigger concern: the U.S. economy could experience negative growth and lose its global powerhouse status. If small businesses are going to disappear, it means fewer jobs, less hyper-growth companies operating, and fewer entrepreneurs motivated to start a business from scratch (less innovation).
Even though a small business may not employ a large number of employees, it does affect the local economy greatly. This is the result of the ripple effect in an economy. For instance, employees get paid from their small business employer and then spend that money at another local small businesses. The money keeps exchanging hands and higher revenue is reported by all companies providing a good or service. But if there are fewer individuals employed by a small business, it means less money is being exchanged by fewer companies and the overall size of the local economy contracts.
“Onion River Sports owner announces closure,” WCAX, November 27, 2017.
“Can Employee Ownership Hold Back a Tsunami of Small Business Closures?,” Nonprofit Quarterly, November 27, 2017.