Same-Store Card Sales Continue to Plunge for Small Businesses

Same-store sales on credit and debit cards continue to drop for small businesses, indicating that any signs of recovery from the recession have yet to be seen by either Main Street merchants or their acquirers. Sales on cards for small merchants fell 12.15% in the fourth quarter last year compared to the same stores in 2008's final quarter, according to figures released this week by Capital Access Network Inc., a New York-based company that makes cash advances to small retailers and restaurateurs based on their card receivables. CAN says the downward trend comes despite fourth-quarter holiday promotions and continues a decline sustained by retailers since the second quarter of 2007. For restaurants, same-store sales on credit and debit cards have been slipping since 2008's third quarter, the company says. The fourth quarter represented the ninth straight period in which same-store purchases on cards fell overall for merchants and restaurants, CAN says. The implication for independent sales organizations and other acquirers is that growth can no longer come from established locations, at least for the time being. “One of the engines of growth was same-store sales for acquirers,” Mark Lorimer, chief marketing officer at CAN, tells Digital Transactions News. “To the extent that has no longer served as an engine of growth, [acquirers] have to go out and acquire new merchants.” Nor is it possible to predict when the trend might turn positive. If there's any good news in the report, it's that the rate of decline in card sales for small businesses open at least a year is abating. These sales plunged 14.84% in the third quarter compared to the same period in 2008, CAN says. “While we are heartened that the rate of year-over-year card sales decline slowed in Q4 2009, the economy continues to punish America's Main Street businesses,” Glenn Goldman, president and chief executive of CAN, said in a statement. CAN's report, generated by its Data Services division and formally called the Small Business Credit Sales Report (though its figures also include debit card sales), is not the first analysis to show sagging same-store sales on cards for small merchants. A report released last summer by First Annapolis Consulting revealed an apparent first-ever decline in same-store sales on Visa and MasterCard for the January through May period (Digital Transactions News, July 30, 2009). That report relied on data from 17 bank and non-bank acquirers. Same-store sales is a closely watched metric in retailing, as it indicates the health of established locations. And small businesses tend to constitute the bulk of the merchant portfolio for most independent sales organizations and small-bank acquirers. CAN's report revealed some interesting differences in performance even within merchant categories. For example, restaurants with average tickets under $25 saw a fourth-quarter decline in same-store card sales of 4.29%, but high-end establishments with tickets exceeding $100 sustained an 8.08% drop (the report does not disclose the actual sales figures from which percentages are derived). There could be opportunities for both merchants and acquirers to exploit such data, Lorimer says. “Maybe moving your steak price down a little bit might actually increase your sales,” he says. CAN, whose businesses include AdvanceMe Inc., a provider of merchant cash advances, derived its report from data linked to more than 50,000 businesses accepting credit and debit cards. These businesses had average annual gross sales of $785,000 and average monthly processing volume of $24,000.