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NSGA Looks at Concentrated Market Power as a Threat to Small, Independent Businesses

By Julie Pitts

NSGA Director of Public Affairs

Concentrated market 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 participate and share their concerns.

Significant Challenges

Table 1 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 their businesses? Table 2 reports the biggest challenges of sporting goods stores are slightly different than the overall survey group.

Table 1 – How significant are the following challenges to your business?

All Respondents Sporting Goods Stores

Big competitors receiving preferential access and special discounts and terms from suppliers resulting in an unequitable marketplace 65%

Amazon's market dominance 62% 44%

52%

Big competitors selling goods and services below cost and erodes market share for smaller sellers 58% 12% 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.

Table 2 – How significant are the following challenges to your business?

All Respondents Sporting Goods Stores

Finding qualified employees 40% 72% Vertical integration of my industry 27% 64%

Amazon's dominance in the online market 62% 52%

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 report the following would be “highly effective” or “very effective” as shown in Table 3.

Copyright 2022 Table 3 –National Sporting Goods Association 1 How effective do you believe the following policy actions would be in improving the survival and success of independent businesses?

End of subsidies and tax breaks for big business Improvements to downtowns and neighborhood business districts

All Respondents Sporting Goods Stores

79% 76%

74% 52%

Break up and/or regulate Amazon 70% 80%

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 to support independent businesses, compared to 58% of the larger group.

Copyright 2022 National Sporting Goods Association 1

Good News

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

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