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NSGA VIEWS CONCENTRATED MARKET POWER AS THREAT TO SMALL, INDEPENDENT BUSINESSES

Business • July 21, 2022

By Julie Pitts
NSGA Director of Public Affairs

Concentrated power is a formidable threat facing small, independent businesses. The National Sporting Goods Association (NSGA) closely monitors this movement as our mission is to help our members grow their businesses and advocate on their behalf. NSGA participates in advocacy efforts with the Institute for Local Self-Reliance (ILSR), a national research and advocacy organization that strives to provide a healthy American economy driven by local priorities, on efforts to reign in marketplace dominance.   

In January 2022, ILSR surveyed small, independent businesses across the United States to gather data about the challenges facing small businesses today and potential policy changes that would help them sustain and grow their companies. Retailers comprised most of the responses with the sizes of the businesses ranging from one-person entities to employers of several hundred people. The respondents had an average of 15 employees and came from all 50 states. The responses included NSGA members as we distributed the survey to our retailers and team dealers and invited them to participateandshare their concerns.   

Significant Challenges 

Table 1 (below) illustrates three primary issues related to concentrated and unregulated market power by dominant corporations which are “extremely significant” or “very significant” to the entire population of respondents. We also report the responses from sporting goods stores which responded to the survey.  

What issues did sporting goods stores identify as “extremely significant” or “very significant” challenges to theirbusinesses? Table 2 (below) reports the biggest challenges of sporting goods stores are slightly different than the overall survey group. 

It is clear the sporting goods retailers who responded to the survey view staffing challenges as a significant problem for business operations. Also compared to the larger group, the vertical integration of the sporting goods industry is problematic as the direct-to-consumer model and consolidation continue to grow. 

Policy Changes 

What policy changes do independent businesses believe will help them flourish? When asked how effective certain policy actions would be in improving the survival and success of independent businesses, the respondents reportthe following would be “highly effective” or “very effective” as shown in Table 3 (below).

Much like the responses from the larger survey group, sporting goods retailers support the end of subsidies and tax breaks for big business as well as the regulation of Amazon. Also noteworthy, 80% of the sporting goods stores stated they favor lowering business taxes in an effort to support independent businesses, compared to 58% of the larger group. 

Good News 

Survey results report 68% of sporting goods stores experienced higher 2021 sales revenue compared to 2019 pre-pandemic levels despite 92% stated that supply chain problems are an extreme or very significant challenge.   

More good news

Although marketplace dominance issues are not easily or quickly resolved, and may never be perfect, these issues are getting the attention of elected officials. For example, the American Innovation and Choice Online Act, which would prohibit certain large online platforms from giving preference to their own products and limiting the availability on the platform of competing products from another business, receives bipartisan support and is considered a legislative remedy to online marketplace dominance. NSGA continues to monitor and support proposed federal legislation which aims to curb big tech and support fair marketplaces.          

Eighty percent of the sporting goods stores which participated in the survey reported they rarely or never advocate on public policy issues that affect independent businesses. If you are interested in expressing your concerns directly to your elected representatives, the NSGA website offers resources for you to easily locate and contact your federal and state-elected officials so that you may voice your opinions and share your experiences. This information can be found at: https://www.nsga.org/advocacy/legislative-advocacy/locate-your-local-representative/

Stay tuned to the NSGA email traffic, the NSGA website, NSGA Scoreboard newsletter, NSGA NOW magazine and NSGA’s social media channels for important updates and calls to action on these matters and anything that helps sporting goods retailers grow their businesses!