Small business desertification: 100 thousand businesses closed in 10 years

Because it is increasingly important to invest in an insurance culture oriented towards risk management even in small businesses

By Paolo Tanfoglio, CEO of Lokky

In Italy, in the period included between Between 2012 and 2022, approximately 100 thousand stores closed to which we add the over 16 thousand street trading businesses that have «lowered their shutters» in the last 10 years. These data are not comforting because, despite the serious crisis in the sector caused by the pandemic, the triggering factors are not only to be found in the lockdown. The constant growth of online sales, the development of modern distribution and the shift of food consumption from the home to away from home have had a profound impact on the contraction of the entire sector. The change in eating habits has also affected the growth of the catering sector, which has seen an increase in bars, restaurants and hotels: 10 thousand more businesses in the same period.

The data in question are fruit of the analysis “Business demography in Italian cities” by the Confcommercio Research Office. The mapping of this survey reveals that medium-large cities are those most affected by this desertification compared to smaller centres, which still develop around neighborhood activities and which are also less subject to the arrival of globalized chains; there growth of the tourist offer is more lively in the historic centres compared to the rest of the municipality; at a geographical level, the South remains characterized by a greater presence of commercial establishments compared to the Centre-North. Going into specifics, we can observe how the various sector categories are divided: books and toys recorded a contraction of -31.5%, furniture and hardware -30.5%, clothing -21.8%, while pharmacies increased +12.6%, computers and telephony +10.8%, accommodation activities +43.3% and catering +4%. The realities examined are 120 medium-large municipalitiesof which 110 provincial capitals and 10 medium-sized non-capital municipalities, excluding the cities of Milan, Naples and Rome as they are multicentric.

Look at it causes of desertification of proximity commerce, as well as in pandemic crisis, also reside in the different way of shoppingor online, there are avenues to focus on for a recovery efficiency and productivityalso through greater innovation and a redefinition of the offer. Even theomnichannelor the use of the online sales channel can be one of the solutions to this decrease. In recent years, purchasing on the internet has in fact gone from sales of 16.6 billion euros in 2015 to 48.1 billion in 2022.

Last coefficient, no less incisive, is that of energy crisiswhich put our commercial fabric to the test. Confcommercio, however, states that a large portion of the reduction «is due, unfortunately, to structural stagnation in consumption which has afflicted Italy for a long time.” The causes, therefore, are multiple and lie far back in time, in our organic structure of the commercial sector.

In this scenario, another factor that can significantly impact the structural solidity of small businesses is the lack of an insurance culture and a consequent exposure to risks which, if not adequately managed, can contribute to the closure of a business. The trend for retailers is, in fact, to insure little or nothing for risks that could cause more serious damage, for example fire and damage to the building, which can lead to very high restoration costs. The Fintech & Insurtech Observatory of the Polytechnic of Milan found that only 30% of customers are ready to embrace the digital channeltheinsurtechthat is, everything that is technology-driven innovation in the insurance sector. This data demonstrates the great growth potential of this segment, which effectively responds to current market needs.

One of the strong points of this sector is certainly the possibility of offering even small businesses a better insurance consultancy service compared to traditional channels. The advantages of this type of approach are various and notable: speed of proposition, effectiveness, flexibility, paperless management of practices (streamlined and online estimates, use of digital signature and cloud storage), transparency and traceability of consents. The goal is to offer products accessible and sustainableto thus generate a real one cultural transformation of small Italian businesses: a heritage to always be supported and safeguarded and which represents the heart of our entrepreneurial culture.