Alaska small businesses face ‘a perfect storm’ as shoppers are encouraged to ‘Buy Alaska’

JUNEAU, Alaska (KTUU) - Alaska small business owners are facing the prospect of decreased holiday spending, increased COVID-19 numbers across the state and the exhaustion of coronavirus relief.

Jon Bittner, the executive director of the Small Business Development Center, described the simultaneous challenges as “a perfect storm” for many small business owners.

“We’re now coming into another round of increased COVID numbers, probably more lockdowns, more restrictions and we don’t have that financial cushion,” he said.

In downtown Juneau, shoppers would typically be just starting to cross gifts off their Christmas lists. During the COVID-19 pandemic, foot traffic has been down for many businesses.

Jayne Andreen is an artist who sells her jewelry at the Juneau Artists Gallery. The gallery is a nonprofit with local artists displaying their works and running the cooperative.

Andreen said the lack of a cruise ship season had been “challenging” for the gallery, and that the Juneau Public Market has typically been her biggest source of annual revenue. This year, the market is being held virtually, and Andreen hopes it gives Juneau business owners a boost.

Across the street, Alicia Smith is the owner of the Imagination Station, a local toy store. The eight months since the COVID-19 pandemic hit Alaska have been stressful.

“It’s been sort of a roller coaster, I think small businesses like mine have just been pivoting, to go with whatever is happening next,” she said.

There have been lockdowns, mandates and the need to keep shoppers and staff safe.

Smith said that the city’s cruise ship season typically pays for her annual rent. Federal and city coronavirus relief has helped pay the bills as has strong local support. “Certainly there’s a lot of stress, but I think we’re going to make it through,” Smith said.

Bittner said buying trends during the pandemic haven’t helped the owners of brick and mortar stores. The Small Business Development Center has data that shows online shopping has shot up 100% across all Alaska demographics during the pandemic.

Mouhcine Guettabi, an economist with the Institute of Social and Economic Research, said there was optimism at a national level that there could be a strong holiday shopping season.

He said the current economic downturn had counterintuitively not been an “income recession,” partly because of federal coronavirus packages and partly because savings rates had increased for many households that had stayed employed.

But, Guettabi also spoke about the shift to online shopping as being a potentially negative factor for Alaska business owners which could see revenues shrink.

In response to the COVID-19 challenges, the Small Business Development Center has relaunched the “Buy Alaska” program to encourage Alaskans to shop local over the holidays.

“We’re trying to drive people to, instead of spending that dollar on Amazon, spend it at a local store, buy a gift card if nothing else,” Bittner said. “I know that people are trying to be a little more frugal with what they’re buying, but these companies, especially right now in this next six to nine-month period, this is sort of the darkest period before the dawn.”

October employment figures also showed a drop in the Alaska retail sector. The Department of Labor and Workforce Development reports that 5.4% fewer people were working in retail compared to the same month last year.

That’s being seen at the Imagination Station. “Normally we’d hire for the Christmas season because it gets really crazy,” Smith said.

This year, the toy store will keep family members on the books, but it won’t hire new staff. Smith explained that’s partly to stop the spread of COVID-19, but it’s also being done to ensure everyone has enough hours to work.

At Mt. Juneau Trading Post, Jack Tripp said he had received federal coronavirus relief which initially felt like a “handout.” The money had helped after the loss of Juneau’s cruise ship season which saw his store’s revenue drop between 80% and 85%.

Tripp was confident that the Alaska Native arts and crafts store would survive so he could pass it onto his seven children. “We’ve been around for 50 years, and hopefully we’ll be around for 50 more years,” he said.

Thousands of other Alaska small business owners have relied on help from $290 million of federal Coronavirus Aid, Relief and Economic Security Act funds that were then disbursed by the state.

The Department of Commerce, Community and Economic Development says as of Monday, 6,737 applications had been received for grants worth between $5,000 and $100,000. A total of 5,543 applications have been approved, paying $271.6 million to Alaska small businesses.

The program was so popular that it stopped taking applications on Sept. 15. The Commerce Department estimates that it was oversubscribed by more than $100 million in excess of what was available.

“We are still processing applications to ensure we can get all of the available funds into the hands of Alaska’s businesses, so these are not the final numbers,” said Glenn Hoskinson, a spokesperson for the department.

Local governments across Alaska have also spent federal funds for small businesses. The Juneau Assembly has distributed over $17 million to businesses, including $2.3 million in new grants worth up to $50,000 that were approved on Monday.