In a bid to give some relief to the worst-affected business group, the small and micro business (SMBs), American Express Co. (AXP - Free Report) has come forward to provide a much-needed support by committing a $200-million incentive over the next several months.
To help encourage consumers to Shop Small, eligible and enrolled U.S. card members can get back $5 after they spend $10 or more at an eligible U.S. small merchant when they shop online, curbside or in-store for maximum 10 times beginning today through Sep 20, 2020. Similar offers are rolling out globally in Australia, Canada and the UK with many more countries like France, Germany, Italy, Japan, Mexico and Spain to follow suit.
Small and micro businesses form the backbone of the global economy, accounting for more than 90% of worldwide businesses and contributing to 50-60% of global employment. The revival of this business group is paramount as in to achieve global economic growth since it generates more than 50% of job opportunities globally.
Moreover, governments across the world are cushioning SMBs in various forms, such as wage subsidy, deferrals in tax filing, small business loans, debt relief, rent relief and many other measures.
According to the Small Business Recovery Research conducted by American Express, 62% of U.S. small businesses reported that they need to see consumer spending return to pre-COVID levels by the end of 2020 to stay in business.
In April, Visa Inc. (V - Free Report) committed two programs worth $210 million to patronize small and micro businesses. Pursuant to this pledge, the company will be backing nearly 50 million small and micro businesses worldwide, which are hard hit by the COVID-19 pandemic.
Additionally, another company in the same space, Mastercard Inc. (MA - Free Report) , recently committed $250 million over a five-year term to nurture small businesses in the United States and other markets where the company operates.
Even though SMBs are main catalysts for global development, these have limited resources to flee a choppy market. Following the coronavirus outbreak, nearly one of every four small business owners sacrificed salaries to stay afloat in the current tough operating climate but without customers, sustenance through 2021 seems challenging for these small businesses.
The situation is, however, not so grim since the Small Business Recovery Research by American Express shows that three-quarters of U.S. consumers are currently looking for ways to Shop Small and support their community while 62% will chose to shop small when businesses in their area reopen, assuming that they will be able to follow social-distancing guidelines. U.S. small business owners are also optimistic with 78% confirming that they are confident of surviving the COVID-19 adversity while 80% expecting to see customers return once normalcy is restored.
Although many U.S. small businesses already adapted their operations to a pandemic-triggered landscape, nearly 65% of U.S. business owners are expecting to reclaim their regular customers to keep running their business.
In three months’ time, the American Express stock has gained 10.4% compared with its industry’s growth of 21.4%.
This price performance looks muted in comparison to another company’s stock return in the same space, which is Discover Financial Services (DFS - Free Report) . Shares of the company have surged 38.3% over the same time frame.
American Express currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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