2019 Independent Business Survey
July 2019About the Institute for Local Self-Reliance

The Institute for Local Self-Reliance (ILSR) is a 45-year-old national
nonprofit research and advocacy organization that provides
innovative strategies, working models, and timely information to
support strong, community rooted, environmentally sound, andequitable local economies. More at www.ilsr.org.

Related work from the Institute for Local
Self-Reliance, available at www.ilsr.org:

Independent Retailers and the Changing Retail Landscape:Findings from a National Survey (Nov. 2017)2016 Independent Business Survey (Feb. 2016)
Monopoly Power and the Decline of Small Business (Aug. 2016)
Amazon’s Stranglehold: How the Company’s Tightening Gripon the Economy Is Stifling Competition, Eroding Jobs, andThreatening Communities (Nov. 2016)

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Table of Contents
Executive Summary..................................................................................................................................................4
Who We Surveyed and How We Conducted This Survey.........................................................................................6
Overview: State of Independent Businesses............................................................................................................7
How Independent Businesses Rank Their Top Challenges......................................................................................8
Competing With and Selling on Amazon.................................................................................................................9
Concentrated Market Power: Mergers, Credit Card Fees, and Digital Ad Markets...............................................12
Affordable Commercial Space...............................................................................................................................14
Access to Loans......................................................................................................................................................15
Barriers to Launching a New Business...................................................................................................................18
Top Public Policy Issues for Independent Businesses...........................................................................................19
Notes...............................................................................................................................................................23

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Executive Summary
As we have documented in previous surveys, independent businesses have
proven nimble during a period of dramatic shifts in technology and consumer
habits. Much of their resilience can be traced to the distinct benefits they
provide to their customers, industries, and communities.
Yet, despite these competitive advantages and their broader importanceto the U.S. political economy, independent businesses are under threat anddeclining in most industries. The findings of our 2019 Independent Business
Survey suggest that the problem isn’t changing technology or consumer
habits. Instead, independent business owners say they are often competingon a unlevel playing field. Many public policy decisions in recent years have
fueled market concentration and favored their big competitors.
This survey’s findings shed light on these challenges and policy issues. In
their comments, business owners also offer insight and guidance to elected
officials looking to build a more equitable, entrepreneurial, competitive, anddynamic economy.
More than 1,000 independent businesses nationwide participated in thissurvey. Retailers made up about half of the responses, while the remainder
represented a mix of industries, from service providers to manufacturers,
banks, wholesalers, and more. In addition to the main questions, businessowners provided hundreds of written responses on various topics. We
analyzed these for additional insights and quoted a representative sample inthis report.
Top Challenges — Among the independent retailers surveyed, Amazon
overwhelmingly ranked as the top threat to their businesses, with 75 percent
of respondents rating the danger posed by the tech giant as significant or
extremely significant. They reported that their second biggest challenge isthat their suppliers are providing more favorable pricing and terms to large
retailers. Coming in third was the high cost of healthcare.
Among non-retail businesses, the cost of healthcare was the top concern,
followed by the difficulty of finding qualified employees, followed bycompetition from big corporations.
Amazon — When asked to assess the overall effect of Amazon, 93 percent
of independent retailers surveyed indicated that Amazon has negatively
impacted their revenue, with more than half describing the degree of impact
as “significant.”
Many of these retailers not only compete with Amazon; they also rely on
its Marketplace to reach consumers. In comments, respondents noted that,given Amazon’s dominance in online shopping traffic, they felt they had little
choice but to sell on its platform. Yet, only seven percent of those who didreported that it was having a positive impact on their bottom line.
Of those selling on Amazon’s platform, 11 percent described theirexperience as broadly successful, while 18 percent said their experience had
been unsuccessful. Another 71 percent described their experience as neither
successful nor unsuccessful, reporting that their Amazon sales generated
additional revenue but only enough to make up for the cost of selling on
the platform.

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The most cited reason for this lack of success was the size of the fees Amazon
charges third-party sellers, a factor named by 60 percent of respondents. Morethan one-third reported that “Amazon sells the same products and competes
against me.”Concentration: Mergers, Swipe Fees, and the Digital Ad Market — Growing
concentration among suppliers was identified by respondents as a major factor
undermining their ability to compete. With fewer suppliers of key goods andservices, independent businesses reported paying higher prices and having amore difficult time negotiating reasonable terms.
One area of concentrated supply that’s of significant concern to independent
businesses is credit and debit card processing. Survey respondents reported
that they are spending an average of more than three percent of their total
revenue on swipe fees.
Another area of concentration affecting independent businesses is the digitalad market. Facebook now captures one-quarter of their total marketingbudgets, respondents said.
Affordable Space — The high cost of leasing or buying space was rated as asignificant challenge for one-quarter of survey respondents. This was notably
higher for those located in cities. Among urban businesses, 52 percent said thatcommercial rents have been rising faster than their sales.
Access to Loans — Many independent entrepreneurs are having a hard time
securing financing to grow. Of those who sought a business loan in the last two
years, 41 percent were either unable to obtain one or received a loan for lessthan the amount they needed. This figure was higher for businesses that arenew, smaller, minority-owned, or women-owned.
In comments about their experiences applying for financing, respondents
who approached community banks reported more positive experiences, whilealmost all of those who applied to one of the “Big Four” megabanks reported
negative experiences.
Top Public Policy Issues — Regulating credit card swipe fees and healthcare
policy ranked as the top issues for all businesses. Among independent retailers,
other top issues included Internet sales taxes, corporate subsidies, labor
requirements, and antitrust policy.
Independent businesses expressed strong support for stepped up antitrust
enforcement. When asked whether they think “regulators should morevigorously enforce antitrust laws against large, dominant companies,” 66
percent agreed, while seven percent disagreed. Asked to evaluate the job
the antitrust enforcement agencies are doing in their own industries, a large
majority, 70 percent, of those who offered a rating said “very poorly” or“poorly.” Only six percent rated antitrust officials as doing their job “well” or“very well.”With regard to Amazon in particular, 70 percent of respondents said that federal
and state antitrust regulators should investigate the company’s market powerand behavior. Only six percent disagreed.
More than 90 percent of respondents support legislation in their state to cap
the dollar value of economic development incentives that big companies
can receive.
Given the importance of these issues to the future of independent businesses,
it’s not surprising that half of respondents reported advocating either frequently
or occasionally on public policy issues that affect their businesses.

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Who We Surveyed and How We
Conducted This Survey
The Institute for Local Self-Reliance’s 2019 Independent
Business Survey gathered data from 1,017 independent
businesses across a range of industries. Retailers made up
about half of the responses, while the remainder included
service providers, manufacturers, farmers, banks, restaurants,
wholesalers, and more. Participating retailers included
booksellers, fabric and sewing supply stores, toy stores,
clothing stores, sporting and outdoor retailers, hardware
dealers, and grocers, among many others.
Businesses from nearly all fifty U.S. states participated,
across a variety of community types from urban to rural areas.
They range in age from newer start-ups founded within thelast five years, which comprised about one-quarter of the
respondents, to some that were started more than a century
ago, with a median business age of 13 years. Together, they
employ nearly 15,000 people. About two-thirds are majorityowned by women, nearly ten percent are majority-owned
by people of color, and a smaller share of participating
businesses are immigrant-owned (two percent), veteranowned (five percent), and LGBTQ-owned (six percent).
In addition to answering a variety of basic survey questions,business owners provided hundreds of written responses,
many quite detailed, to open-ended questions about market
consolidation, access to capital, and e-commerce, among
other topics. We analyzed these qualitative responses for
additional insights that are described in this report.
The survey was conducted online in April and May 2019.
It was distributed to the members of several national
associations, including the American Booksellers
Association, American Specialty Toy Retailing Association,
Brixy, Independent Office Products and Furniture Dealers
Association, Running Industry Association, and The Fabric
Shop Network. It was also distributed to the membersof numerous city- and state-wide independent businessorganizations around the country.

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Overview: State ofIndependent Businesses
As we documented in a previous survey, in 2017, independent businesses
have proven surprisingly resilient during a time of considerable upheaval.1
Amid seismic shifts in technology and consumer habits, which have crippled
an array of larger companies, many independent businesses have managed
to hang on and even prosper.
Much of this resilience can be traced to the distinct advantages and benefits
that independent businesses provide to their customers, industries, andcommunities. These small enterprises play an outsized role in creating new
innovations and bringing new ideas and products to market. They outperformtheir larger competitors on key performance measures, often because of theedge they gain by having direct relationships with their customers and deep
knowledge of their products and industries.2 Most importantly, a healthy
independent business sector helps to distribute wealth and opportunity
broadly, and contributes in essential ways to sustaining a vibrant democracy,
according to a growing body of scholarship.3
Yet, as this survey documents, despite their critical market contributions andbroader importance to the U.S. political economy, independent businesses
face major barriers to starting and growing. They’re often competing on aplaying field that is far from level. Many public policy decisions in recent
decades have favored large corporations, at the expense of open markets
and fair competition. As a result of these decisions, even as independent
businesses demonstrate their nimbleness and adaptability, they’re operating
in a broader policy environment that hobbles their ability to succeed. In thelast decade, the number of independent businesses has fallen sharply across
many sectors of the economy. The rate at which new businesses are forming
has also plummeted.4
This survey sheds light on the barriers and policies that are impeding the
success and growth of independent businesses. Its findings offer insight andguidance to elected officials and citizens looking to spur entrepreneurshipand build a more equitable, competitive, and dynamic economy.

Even as they demonstrate their nimbleness andadaptability in the face of shifting dynamics, independent
businesses are operating in a broader policy environmentthat hobbles their ability to compete.

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How Independent Businesses
Rank Their Top Challenges
The survey asked respondents to rate the significance of more than a dozen
challenges they face on a scale of 1 to 5, with 1 being not at all challenging and 5
being an extremely significant challenge.

Independent retailers
overwhelmingly ranked
Amazon as their top
concern. Among nonretail businesses, the costof healthcare was the top
concern.

Independent retailers overwhelmingly ranked Amazon as their top concern. Theirsecond biggest concern is that their suppliers are charging them higher prices, oroffering them less favorable terms, than they give to large retailers. Coming in third
was the high cost of healthcare.
Among non-retail businesses, the cost of healthcare was the top concern, followedby the difficulty of finding qualified employees, followed by competition from big
corporations.
Amazon significantly outweighed most other concerns for independent retailers.
This challenge received an average score of 4.16, with a large majority of
respondents — 75 percent — citing this as a significant challenge, giving it a score ofeither a 4 or 5.
The second biggest challenge cited by independent retailers — that their large
competitors receive better pricing and terms from suppliers — received an averagescore of 3.81 in the ranking. Two-thirds rated this as a significant challenge.
Although the cost of healthcare was eclipsed by concerns about both Amazon andunfavorable supplier terms and pricing, it still ranked as a major concern among
independent retailers. This issue received a score of 3.49 and 60 percent gave it
either a 4 or 5.
While non-retailers ranked healthcare costs as their top concern, the share who
rated this challenge as significant (giving it 4 or 5 on the scale) was 59 percent,almost equal to the share of retailers who reported the same.

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Competing With and Sellingon Amazon

Respondents were asked a series of questions about competing with Amazon
and being a third-party seller on its Marketplace platform.

When asked to assess the overall effect that Amazon has had on theirbusiness, a very large majority of retailers (93 percent) indicated Amazon has
negatively impacted their revenue, with more than half describing the degreeof impact as “significant.” Only one percent said Amazon had positively
impacted their revenue.

In comments, survey respondents described Amazon’s impact with words andphrases such as, “significant,” “devastating,” “single biggest threat,” “single
biggest challenge,” and “single largest impediment to… success.”
In addition, survey questions sought to understand the experience ofindependent retailers as third-party sellers on Amazon’s Marketplace. About
1 in 6 of the more than 550 retailers who participated in the survey have soldtheir products through Amazon’s platform.

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Among those currently selling on Amazon’s Marketplace, only seven percent
reported that doing so is having a positive impact on their income.

Among those currently selling on Amazon’s Marketplace,
only seven percent reported that doing so is having a
positive impact on their income.
In the comments, one theme that surfaced repeatedly was that Amazon’s
large market share has left sellers with little choice but to sell on its platform,
at least for those seeking to reach shoppers online. One business owner
noted that her business sells on the platform “out of necessity,” while anothersaid that “we are stuck with them [Amazon] when it comes to selling” online,
given few alternatives. “If we had the choice, we would rather not be sellingon the Marketplace,” said a bookseller from Minnesota.
Of those currently selling on Amazon, 11 percent described their experienceas successful, while 18 percent reported that their experience has been
unsuccessful. Another 71 percent described their experience as neither
successful nor unsuccessful, with Marketplace sales generating some
additional revenue but only just enough to make up for the cost of selling on
the platform.
Current third-party sellers who expressed unsuccessful or only partly
successful experiences were asked to indicate which factors make it hardfor their businesses to succeed on Amazon’s platform. The two most cited
reasons were the size of the fees for selling on Marketplace (60 percent)and competition from other third-party sellers (55 percent). More than onethird (35 percent) cited the fact that “Amazon sells the same products andcompetes against me.”2019 Independent Business Survey

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In comments, several sellers noted that Amazon has increased the fees
charged to sellers. “We have a smaller return on investment now than we did
a decade ago, in large part because of fees for both sales and FBA,” noteda retailer in Los Angeles, referring to Amazon’s warehousing and orderfulfillment services. “Amazon continues to squeeze seller profits,” a retailer
from Florida commented.
Others described abrupt decisions by Amazon that had disrupted theirbusinesses. “They [Amazon] suspended our account and there was norecourse,” said a retailer in Massachusetts.
11 percent of current sellers described their experience on the platform asvery successful. They cited increased customers and wider geographic reachas the main factors.

The survey asked retailers who used to be Marketplace sellers, but are nolonger, to indicate which reasons caused them to stop selling on Amazon.
A majority (57 percent) reported that the size of fees Amazon charges
made their products neither price-competitive nor profitable. The next mostcommon reason (43 percent) was that retailers’ views about the company ledthem to want to stop doing business on the platform. Other barriers included
Amazon’s frequent changes to its terms and fees, and the fact that Amazon“sells the same products and competes against me.”Among independent retailers that are neither current nor former third-party
sellers on Amazon, a large majority (89 percent) indicated they are unlikely
or very unlikely to join the platform in the next year. “I am afraid to sell on
Amazon because I hear rumors that if something is selling well they noticeand then figure out a cheaper way to sell the same items for less. We need tobreak up Amazon, so they are not both the Selling Platform and the Seller. It
is unfair to small businesses,” noted a retailer of artisan goods in Kentucky.

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Of the respondents who are considering joining Marketplace, the mostcommon reasons cited for propelling them to do so were that more of theircustomers are shopping on Amazon (40 percent) and that traffic on theirbusiness’s own website is down (40 percent).

Concentrated Market Power:
Mergers, Credit Card Fees,
and Digital Ad Markets
Growing concentration, particularly among suppliers that control access tocritical goods and services, was identified by survey respondents as a major
factor undermining their ability to compete and succeed.
Mergers — More than one-quarter of respondents — and one-third of retailers—
indicated that mergers in their industries “are creating an unfair playing
field.” In a separate question, 40 percent of retailers and nearly 30 percent
of manufacturers and other non-retail businesses indicated there had been asignificant merger in their industry within the last five years.
In response to an open-ended comment question, respondents named
several specific mergers that had affected their businesses, including thePenguin-Random House merger in the book industry, buy-outs of craft
breweries and distilleries by multinationals in the food and beverage sector,
the tie-up of Expedia-Orbitz in the travel services sector, Amazon’s acquisitionof Whole Foods, Staples’s purchase of Essendant in the office products
channel, and growing concentration in the healthcare and banking sectors.
More concentration among suppliers has led to higher prices and madenegotiating reasonable terms more difficult, respondents noted. “The FTC[Federal Trade Commission] allowing Staples to purchase Essendant was ahuge blow to the Independent Dealer Channel and will drive up pricing to all
consumers,” noted an office supply and office furniture dealer in Pennsylvania.
Essendant is one of only two wholesalers that supply office products dealers.

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In addition to higher supplier prices, respondents observed other negative
impacts from these deals, including less flexibility, less choice, less productdiversity, and lower product quality. “I am concerned about the consolidationof independent vendors, not least because of the pressures I know that is
putting on some of the smaller publishers — as well as the amplified voice it isgiving a smaller range of titles,” said a bookseller in California.

More concentration amongsuppliers has led to higher
prices and made negotiating
reasonable terms moredifficult, respondents noted.

Credit and Debit Card Processing — One area of concentrated supply
that’s impacting independent businesses across multiple industries is credit
and debit card processing. Visa and MasterCard dominate this market,
and businesses can hardly refuse to accept their cards. This gives the cardcompanies the power to impose fees on merchants that are far in excess ofthe cost of processing these transactions,5 with little risk of losing themas customers.
In our survey, independent retailers reported that they are spending an
average of more than three percent of their total revenue on swipe fees toprocess credit and debit cards.
Given this high cost, it’s not surprising that a majority of retailers (53 percent)and more than one-third of non-retailers (36 percent) said that credit cardswipe fees are one of their top public policy issues.
Digital Ad Markets — Another area of supplier concentration that is affecting
independent businesses is the digital ad market. Increasingly, Facebook,
Google, and, Amazon are gatekeepers for businesses looking to market theirgoods and services. Survey respondents reported that these three companies
together account for one-third of their total marketing budgets (including
both online and offline advertising). Facebook, which owns Instagram,
captures the largest share by far, accounting for 24 percent of survey
respondents’ total marketing budgets.

Most independent businesses buy advertising on these platforms, the survey
found. Facebook was the most commonly used platform, with 82 percent ofrespondents indicating some digital ad spending on its platform. About 68
percent of businesses reported buying ads on both Google and Instagram,
while 62 percent said they had spent marketing dollars on Amazon.

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Affordable Commercial SpaceA lack of affordable space is another barrier facing independent businesses,
particularly those in urban areas. Overall, one-quarter of respondents rated
the high cost of leasing or buying space as a significant challenge (giving it ascore of either 4 or 5). This share was higher among retailers, at 30 percent.
Among retailers that lease their space, nearly half (46 percent) reported
that “Rents have been increasing faster than my sales.” Only ten percent said
that rents have been growing slower than their sales. (About 70 percent ofretailers lease their space, while 30 percent own it.)For businesses that identified their location as a city (as opposed to a suburb,
small town, or rural area), a higher share, 52 percent, said commercial rents
have been increasing faster than their sales. Only six percent of urban
businesses said rents have been rising slower than sales.
(In a 2016 report, Affordable Space: How Rising Commercial Rents Are
Threatening Independent Businesses, and What Cities Are Doing About It, we
documented steep increases in commercial rents across multiple cities.6)

Some respondents described
how real estate speculation
is warping local business
districts in ways thatboth shut out independent
businesses and fail theneeds of residents.

In comments, some respondents described how real estate speculation
is warping local business districts in ways that both shut out independent
businesses and fail the needs of residents. In Cambridge, Mass., for example,
a store owner reported that finance companies have been “purchasing large
amounts of commercial rental properties… forcing out local tenants andbringing in ‘equity’ driven companies who will pay their over-inflated rents orleaving retail spaces as dark storefronts, while taking tax breaks on them.”
Although it’s not a viable option for many businesses (not least because ofrestricted access to capital, as discussed below), one way some have
responded to rising rents is by buying their buildings. In the comments,
several respondents noted that they sought commercial mortgages as adirect result of rising rents. “Because of the significant increases in rent in ourcity, we opted to purchase a building that needed a lot of TLC,” noted aservice provider in Portland, Maine. “We were able to work with a community
bank and the SBA to fund the purchase and renovations.”

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Access to Loans
Many independent entrepreneurs are having a hard time securing financing
to start or grow their businesses. While only a minority of respondents citedaccess to financing as a significant challenge (giving it a score of either 4 or
5), this is partly a reflection of the fact that, at any given time, most businesses
are not seeking financing. But among those who are, access to loans is amajor concern. The survey found that this was an especially acute problem
for new businesses (those started in the last five years), one-third of which
reported that obtaining financing was currently a significant challenge.
Survey respondents were asked a series of questions about their experiences
seeking business loans. Roughly one in four applied for a loan within the past
two years. Of these, 41 percent were either unable to obtain a loan or
received a loan for less than the full amount they needed.

Businesses that are either new, smaller, minority-owned, or women-owned
had a tougher time securing financing than the average independent
business in our survey.
Among new businesses, fewer than half of those that sought a loan in the last
two years were able to secure the financing they needed. “We were trying to
get a loan to start a new business, but were repeatedly told we could not geta loan… without being established for a certain amount of time,” noted theowner of a new bookstore in California.

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Entrepreneurs of color were also significantly less likely to obtain thefinancing they needed. One-third of those who applied for a loan in the last
two years indicated not getting approved at all, while 19 percent received
a loan for less than the full amount they sought. Among women-owned
businesses, 20 percent found a lender but received a loan for less than theirfull request, while 24 percent were not approved at any level.
Among those businesses that secured a formal loan in the last two years,
many relied on a community bank. While these small, locally owned banks
represent only a modest share of the market, accounting for 17 percent of
the banking industry’s assets, they play an outsized role in funding small
businesses. For those surveyed who succeeded in getting a loan, 42 percent
reported that the loan was made by a community bank. Only 11 percent were
financed by one of the “Big 4” banks, which together account for 40 percentof the industry’s assets. Of the remaining businesses that obtained a formalloan, 18 percent reported receiving a loan from a regional or national bank(other than the “Big 4”), 17 percent from an online lending platform, and 12
percent from a credit union.

Nearly 200 survey respondents offered detailed comments about theirexperiences seeking financing, which we analyzed for trends and patterns.
In general, respondents who described approaching or working with
community banks, credit unions, and some regional banks reported positive
experiences, whereas most of those who dealt with one of the megabanks
reported negative experiences.
“We’ve had a relatively easy time obtaining loans from our local community
bank,” said a Wisconsin-based food and drink manufacturer, echoing dozens
of similar comments. “They know our business and our community, and arevery willing and understanding to give loans in situations where other banks
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In a comment typical of the negative experiences, a North Carolina
entrepreneur sought start-up loans from both Bank of America, which isheadquartered in Charlotte, and Wells Fargo, but had little luck: “We tried toapply for a business start-up loan with BOA [Bank of America] since we bankwith them personally but we [were] told that they didn’t do business loans
without 3 years of business finances. We opened business accounts with
WF [Wells Fargo] and we[re] given a very small LOC [Line of Credit], $5,000,
and a business credit card for $10,000 but they wouldn’t approve us for any
loans….We had to finance our start-up expenses with a personal HELOC[Home equity line of credit] and credit cards.”
When the big banks came up short, respondents who turned to local banks
often found success. “I had a horrible experience with Citizens Bank, when
I got funding to start a second business,” noted a bookstore owner in
Delaware. “[I] got my loan but then fell through a major crack in their system
at a critical point in the loan’s maturity. They left me hanging for months, so I
approached a local bank and got all of the funding I needed. It’s not trumplevel funding, but it keeps my tiny boat afloat.”
Certain kinds of obstacles to obtaining financing surfaced repeatedly inthe comments. Many entrepreneurs said that their loan applications were
evaluated not on the basis of their business’s financials, but rather on theirpersonal finances, and that they were required to put up personal collateral,such as their homes. For entrepreneurs lacking home equity or saddled withstudent debt, this could block their ability to start or grow a business. As abusiness in North Carolina noted, student loan debt “kept me from being
approved for a business loan for my established (13 year old) business.”“We’ve had a relatively easy time obtaining loans fromour local community bank,” said a Wisconsin-based foodand drink manufacturer. “They know our business andour community.”
Businesses that have unusual ownership structures, such as cooperatives, orthat operate in niche sectors, also struggled to secure loans because of a lackof familiarity or comfort with their business models among lenders.
Several of those who commented said they had received loans backed by the
U.S. Small Business Administration’s loan guarantee programs and cited theimportance of SBA loans for businesses unable to secure a conventional loan.
Relying on the SBA came with a particular risk, though: For those with loan
approvals in process in late 2018 and early 2019, the government shutdown
was a costly and debilitating disruption, several affected respondents noted.

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Barriers to Launching a
New Business
The survey’s findings highlighted several areas in which entrepreneurs trying
to start new businesses faced particular impediments and would benefit fromadditional support, resources, and policy changes. Independent businesses
that opened within the last five years were asked about the biggest barriers
they faced when launching their business. The results are presented in thegraph below.

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Top Public Policy Issues for
Independent Businesses
Asked which public policy issues are most important to their businesses,
regulating credit card swipe fees and healthcare policy ranked as the top
issues among respondents.
Among the independent retailers surveyed, several issues central toachieving a fair playing field relative to their big competitors ranked high.
Credit card swipe fees, Internet sales taxes, corporate subsidies and tax
incentives, and antitrust policy all ranked in the top six issues for retailers,
alongside healthcare policy and labor requirements.

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Among non-retailers, economic development programs, education andworkforce training, industry-specific regulations, and government
procurement were significant issues, after healthcare policy and swipe fees.
Businesses were then asked several questions about specific policy issues.
When asked whether they think “regulators should more vigorously enforce
antitrust laws against large, dominant companies,” a large majority (66percent) agreed, while just seven percent disagreed. Some 28 percent
respondents chose “don’t know / not sure” in response to this question, which
may reflect a lack of public knowledge of antitrust policy. “I do not know what
antitrust is,” wrote a hair salon owner in Phoenix. “I would like to know.”

Businesses were then asked to evaluate the job antitrust enforcement officials
are doing in their own industries to police anti-competitive behavior bydominant firms. A large share (40 percent) said they didn’t know. Among
those who did rate how the antitrust agencies are performing, a sizable
majority, 70 percent, said “very poorly” (44 percent) or “poorly” (26 percent).
In contrast, only six percent rated antitrust officials as doing their job “well” or“very well.”Among the independent retailers surveyed, several issues
central to achieving a fair playing field relative to their
big competitors ranked high.

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With regard to Amazon in particular, a large majority (70 percent) said thatfederal and state antitrust regulators should investigate the company’smarket power and behavior. Only six percent disagreed.

In the comments, businesses described specific ways that they believe
Amazon exploits its market power to undermine competition. Alongsideconcerns about Amazon’s position as the dominant platform for e-commerce,
another commonly cited issue was the company’s practice of selling items
below cost. “They are buffeted by such a massive influx of income from their
non-retail divisions that they can afford to sell key items at a loss, thus driving
even more vendors out of business,” noted a retailer in Illinois. “They havedeliberately devalued the products I sell (books) just to seize power in themarket,” a bookseller in upstate New York said.
Some pointed to federal officials’ failure to block Amazon’s acquisitions.
“With their acquisition of Whole Foods, it’s only a matter of time before
Amazon dominates the grocery [and] food business, much the same way that
Walmart has done,’ said a grocer in New Hampshire.
“Breaking up the Amazon monopoly is probably the number one achievementthat the federal government could undertake to make the independent
business economic climate fair,” a retailer in Colorado commented.

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Many respondents also noted the ways that lopsided tax policies distortcompetition by giving Amazon an advantage that smaller businesses lack.
“Amazon is building a second headquarters location in our county and isreceiving tax incentives from both state and local governments,” said a
Virginia retailer. She added: “Amazon made over $11B in profits in 2018
and paid no federal income tax while my store, which made a small profit,
paid thousands.”“Amazon made over $11B
in profits in 2018 andpaid no federal income
tax while my store, which
made a small profit, paid
thousands,” said a Virginia
retailer.

On a related topic, respondents expressed strong views on tax incentives andother economic development subsidies that tip the scales in the favor of big
businesses. Nearly all respondents (91 percent) support legislation in theirstate to cap the dollar value of economic development tax breaks that big
companies can receive from state and local governments.
“Our city is using our taxpayer ‘economic development’ dollars mostly toentice large corporations… It’s contributing to the concentration of capitaland we are NOT seeing any accountability for how many jobs are being‘created’ or brought to our community by these dollars. It’s not transparent
or accountable,” noted a grocery store owner in Kentucky. “We feel it is very
important to the health of communities to retain local businesses and offer
them the same support and tax advantages as megabusiness,” a retailer in
Alaska commented.

Frustration over the political power that large corporations wield surfaced
repeatedly in the comments survey respondents provided. “Independent
businesses are the backbone of the economic structure in America and due
to lobbyists, special interests, and other factors, we no longer compete on alevel playing field,” said an office supply dealer in Arizona. “While I am neverfor more government regulation and interference in the free market,” added
a toy retailer in South Carolina, “I do think there needs to be less lobbying
and back door dealing with government and big corporations.”

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Given the pivotal importance these issues and barriers are to the future ofindependent businesses, it’s not surprising that half of respondents reported
advocating frequently (11 percent) or occasionally (37 percent) on public
policy issues that affect their businesses.

“I do think there needs to be less lobbying and back door
dealing with government and big corporations,” noted a
toy retailer in South Carolina.

Notes

1
“Independent Retailers and the Changing Retail Landscape.” Institute for Local Self-Reliance, Nov. 2017.
Available at https://ilsr.org/changing-retail-landscape/2“Monopoly Power and the Decline of Small Business.” Stacy Mitchell, Institute for Local Self-Reliance, Aug.
2016. Available at https://ilsr.org/monopoly-power-and-the-decline-of-small-business/
3“Key Studies: Why Local Matters.” Institute for Local Self-Reliance, Jan. 8, 2016. Available at https://ilsr.org/
key-studies-why-local-matters/
4“Declining Business Dynamism: What We Knew?” Ryan A Decker et al., American Economic Review, May
2016. Available at https://www.aeaweb.org/articles?id=10.1257/aer.p20161050

5
The actual cost of processing credit and debit card transactions has fallen by more than half over the last
decade, according to the Federal Reserve. The average cost to the card companies is now about 3.6 cents pertransaction. Yet the swipe fees that businesses pay for this service remain very high. A $50 purchase costs abusiness roughly $1.50 in swipe fees, a substantial markup for the card companies and card-issuing banks.
“2017 Interchange Fee Revenue, Covered Issuer Costs, and Covered Issuer and Merchant Fraud Losses Related
to Debit Card Transactions.” Board of Governors of the Federal Reserve System, March 21, 2019. Available athttps://www.federalreserve.gov/paymentsystems/files/ debitfees_costs_2017.pdf
6“Affordable Space: How Rising Commercial Rents Are Threatening Independent Businesses, and What
Cities Are Doing About It.” Olivia LaVecchia and Stacy Mitchell, Institute for Local Self-Reliance, April 20, 2016
Available at: https://ilsr.org/affordable-space2019 Independent Business Survey

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