MerchantCircle Press Releases

Merchant Confidence Index Reveals Local Business Owners See Economy Improving But Remain Reluctant to Spend and Hire

Latest Merchant Confidence Index Stands at 60.5 on 100 Point Scale

Mountain View, Calif. — March 11, 2010— MerchantCircle, the nation’s largest social network of local business owners, today issued the results of its second quarterly “Merchant Confidence Index,” a survey that gauges confidence levels of local business owners in the current U.S. economy. Seven out of 10 merchants indicated that today’s economy was the same or better than it has been over the last 12 months. Nearly 12,000 local merchants responded to the current survey. For future releases, four key indicators about the current economy, revenues, hiring and marketing spend expectations will be tracked quarterly to show changes in merchant confidence over time.

“While we see merchant confidence in the current economy beginning to return,” said Darren Waddell, VP of Marketing for MerchantCircle, “our data reflects that local businesses are reluctant to respond to with increased spending on marketing and hiring. We are encouraged though to see that revenue expectations are up, and that more than a quarter of our merchants saw increased holiday sales over 2008. Many of these signs point toward a healthier small business environment in 2010, and we’re hopeful the macro economic climate can support that direction.”

Sentiment About Current Economy Improves, Sales Projections Up, But Merchants Remain Uncertain About What Lies Ahead

• When merchants were asked to rate today’s current economy versus the past 12 months, 27.8 percent said it was “somewhat” or “significantly” improved while 30.7 percent said it was “about the same”. 22.6 percent said the economy was “somewhat weaker” today and 18.9 percent said it was “much weaker.”
• Nearly 50 percent of local merchants surveyed expect an increase in sales revenue to “somewhat” or “significantly” improve over the next three months. This marks a nearly 10 percent increase over November 2009.
• Holiday 2009 sales finished slightly better than expected among local businesses. When asked in November 2009 how they expected holiday sales to go, only 19 percent of merchants expected any improvement over holiday 2008. In reality, the post-holiday index reveals that 25.8 percent of local merchants saw an improvement in 2009 holiday sales over 2008.
• When asked to rate the statement "The worst effects of the recession are behind us", sentiment was virtually flat from the November survey results. 44.7 percent of merchants indicated that they think the worst is yet to come (versus 47.3 Nov. 2009), and nearly 24 percent think the worst is behind us (versus 23.2 percent Nov. 2009).

Hiring and Marketing Expectations Barely Inching Up; Lines of Credit Remain Hard to Access

• Currently, 17.1 percent of small businesses expect to increase their headcount over the next three months, compared to 14.7 percent in November, 2009, a 16 percent increase. 11.5 percent expect to reduce headcount over the next three months, versus 13.4 in November, 2009, a 17 percent decrease.
• Currently 46.3 percent of merchants expect their marketing expenditures to remain flat over the next three months. 29.2 percent expect to increase marketing spend, up 2.6 percent from November 2009. 24.5 percent expect to cut marketing expenditures over the next three months, down 1.2 percent from the last survey.
• 58.8 percent of local merchants said credit availability had “worsened” or “significantly worsened” over the last three months, 36.7 percent said access to credit remained the same, and just 4.6 percent said it had “improved” or “significantly improved.”

Merchants in California and Texas Slightly More Optimistic than Other States

• 30.7 percent of California merchants and 29.3 percent of Texas merchants believe the economy is better now than it has been over the past twelve months (versus 27.8 percent nationally)
• 20.2 percent of Texas merchants expect to increase headcount over the next three months (versus 17.1 percent nationally).
• 29.1 percent of Texas merchants agree that the worst of the economy is behind us (versus 24 percent nationally). 53.9 percent of Texas merchants expect sales revenues to increase “somewhat” or “significantly” over the next three months (versus 50 percent nationally)

About the Merchant Confidence Index

The Merchant Confidence Index is a quarterly survey conducted by MerchantCircle, the largest social network of local business owners in the U.S. with over 1 million members. The Index is designed to track trends in small business sentiment over time and is derived from four key questions designed to synopsize the prevailing trends among local business owners. The overall index score is based upon a standardized five-level Likert scale.

This second Merchant Confidence Index survey was fielded online, between February 9th and February 16th, 2010, and sent to a random sample of MerchantCircle's member base of over one million local business owners. There were 11,952 total responses from local business owners across the United States. Just over ten percent of responding businesses classified themselves as retailers, while 90 percent fell into other categories, such as professional services, legal and financial services, automotive, health and beauty, entertainment, travel and more. The survey data can be broken out by state, business type or business size (by headcount) upon request. No incentive was offered to complete the survey. To read the full survey and its results, please visit www.MerchantCircle.com/corporate/blog/.

About MerchantCircle

Founded in 2005, MerchantCircle is the largest social network of local business owners in the nation, combining social networking features with a customizable web listing that allows local merchants to attract new customers. More than 15 million MerchantCircle business listings across the country are easily accessed on major search engines. Currently, over merchants on the MerchantCircle network upload pictures, blog, create coupons and newsletters, and connect with other merchants.

MerchantCircle is located in Mountain View, CA, and is funded by Rustic Canyon Partners, Scale Venture Partners, Disney’s Steamboat Ventures, and IAC. Learn more at www.merchantcircle.com.