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AmEx (AXP) Event Sees Solid Consumer Spending on Small Businesses

By Zacks Investment ResearchStock MarketsNov 29, 2021 12:08AM ET
AmEx (AXP) Event Sees Solid Consumer Spending on Small Businesses
By Zacks Investment Research   |  Nov 29, 2021 12:08AM ET
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American Express Company (NYSE:AXP) AXP recently witnessed a strong 12th year of Small Business Saturday on Nov 27, 2021. During the event, U.S. shoppers turned out in large numbers to support small businesses of their communities.

The event was initially launched by American Express more than a decade ago to aid local businesses and fetch them a strong customer base.

This year, the Small Business Saturday benefited on the back of gradual recovery of U.S. economy. Though pandemic-related woes continue to linger, increased consumer spending and resumption of business activities are expected to shape the turnaround of the economy.

Per the American Express 2021 Small Business Saturday Consumer Insights Survey’s results, U.S. consumers who shopped at independent retailers and restaurants on the Small Business Saturday incurred overall reported estimated spending of around $23.3 billion. The figure not only rose 18% from the 2020-end level but also indicated roughly 19% growth from the pre-pandemic spending in 2019.

The same survey indicated digital integration within the shopping experiences of consumer, as online sales contribute significantly to revenues of small businesses. Online shopping increased modestly on the day of the campaign with 58% of shoppers indulging in online purchases, compared to 56% and 43% in 2020 and 2019, respectively.

Such robust results are testament to American Express' sincere efforts to shape consumers sentiment toward shopping at independent retailers amid the holiday season. This will be beneficial to the U.S. economy as small businesses form an integral part of it.

Time and again, American Express remained committed to assisting small businesses, which were severely hit with inadequate resources and financial uncertainties due to the COVID-19 pandemic. The Small Business Saturday is one such effort of AXP, which has witnessed around $163 billion consumer spending at small businesses over the last 12 years. This Zacks Rank #3 (Hold) worldwide integrated payments company intends to generate consumer spending at small businesses amounting to $100 billion during the next five years.

American Express has Global Commercial Services segment in place, through which it offers a diverse array of cards in a bid to aid small businesses. Increased utilization of these offerings is likely to generate more revenues for the AXP’s segment, which witnessed total revenues net of interest expense growth of 13% in the first nine months of 2021 from the prior-year comparable period.

Similar to American Express, other companies making concerted efforts to help small businesses include Mastercard Incorporated (NYSE:MA) MA, Visa Inc (NYSE:V). V and Global Payments (NYSE:GPN) Inc. GPN.

Mastercard keeps on partnering with worldwide fintechs and delivers numerous innovative digital payment tools to bring more small businesses under the ambit of a growing digital economy. MA made several investments to roll out cost-effective solutions for assisting small businesses to adopt digital means. By 2025, Mastercard aims to include 50 million micro and small businesses within the digital economy.

Visa has always been committed to providing necessary assistance to small businesses, ranging from technological assistance to empowering them with enhanced payments solutions. V has been catering to the unique needs of small and medium-sized businesses through the Small Business Hub, which was launched in 2020. Visa’s emphasis remains on providing digital assistance to underserved consumers and businesses to helping small businesses cope with the changing technology demands triggered by the COVID-19 pandemic.

Global Payments has been works closely with over 3.5 million small and midsize businesses by rolling out enhanced and secured payments technology solutions. GPN equips these businesses with seamless acceptance of payments in all commerce channels thereby resulting in better and secured outcomes for customers.

Shares of American Express have gained 32.2% in a year compared with the industry’s growth of 19.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Shares of Mastercard, Visa and Global Payments have lost 4.8%, 6.7% and 38%, respectively, in a year.

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Mastercard Incorporated (MA): Free Stock Analysis Report

Visa Inc. (V): Free Stock Analysis Report

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AmEx (AXP) Event Sees Solid Consumer Spending on Small Businesses

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AmEx (AXP) Event Sees Solid Consumer Spending on Small Businesses

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