Improvement in rental delinquency trends among small businesses, according to a recent survey

In the ever-evolving retail landscape, small businesses are adapting to suit shoppers by integrating technology into their stores. This shift includes deploying in-store technology to complement shop-in-shops and create age-appropriate experiences.

The integration of technology is not just limited to retailers, as they are also reworking their stores to provide complementary shop-in-shops. This move aims to offer a more personalised shopping experience and cater to the diverse needs of their customers.

However, the journey for small businesses has not been without challenges. In September 2021, 59% of small businesses reported charging more for their goods and services due to inflationary pressures. This increase in prices is a direct response to the rising costs they face, such as higher rent and other operational expenses.

Speaking of rent, nearly half (46%) of small businesses surveyed in April 2021 reported that their rent was higher than it was six months prior. This trend continued into September, with rent delinquency rates among small businesses decreasing from 40% in August to 30%. This shift is encouraging news, and if this growth continues into Q4, it could mark a stronger recovery for small businesses.

The rent delinquency rate among small retailers was particularly high in February 2022, with 34% of small retail businesses unable to make rent, six percentage points higher than in April. This struggle was further exacerbated by the pandemic, with both CBL and PREIT filing for bankruptcy in November 2020.

However, landlords with larger retail tenants are less willing to give rent relief, agree to percent-sale rent arrangements, or allow other pandemic concessions, according to a JLL report released in February 2022. This reluctance to negotiate rents has been a significant hurdle for small businesses trying to recover from the early COVID-19 pandemic lows.

In a report released in July 2021, Alignable cited inflation, higher interest rates, gas prices, rent hikes, supply chain issues, and other factors as reasons why small retailers were near their breaking point. Almost six in 10 small retailers were on the verge of shuttering, highlighting the dire situation many small businesses found themselves in.

Despite these challenges, there are signs of hope. In September 2021, 29% of small businesses reported recovering from the early COVID-19 pandemic lows and making "as much if not more" than pre-COVID. This recovery is a testament to the resilience of small businesses and their ability to adapt in the face of adversity.

As the retail landscape continues to evolve, it is clear that small businesses will need to continue adapting to survive. Whether it's integrating technology, reworking stores to create age-appropriate experiences, or negotiating rent with landlords, small businesses are proving their mettle in the face of unprecedented challenges.

Improvement in rental delinquency trends among small businesses, according to a recent survey