Small businesses struggle to survive downturn

Just ask Wal-Mart Stores Inc., which blamed a pullback in spending by more cautious small business customers shopping at its Sam's Club stores for lower-than-expected December sales figures on Thursday. The surprise shortfall stunned investors in the world's largest retailer, which had been weathering the recession by catering to bargain shoppers.

The scrimping is spurring Office Depot Inc. — which gets about 80 percent of its business from corporate customers, most of whom operate small and home-based businesses — to change some of its merchandise, said Chief Executive and Chairman Steve Odland.

The office supply chain is bumping up the number of sheets in some reams of paper and repackaging items such as pens into smaller — and cheaper — packages.

"They say 'I just can't afford to buy a bulk pack of this,'" Odland said.

Officials said fewer customers were buying more expensive items like desks and file cabinets or computers.

"I do what I've got to do to keep the business running and the employees paid," said 36-year-old Parrish Walker, who owns Walker's Oak and More Furniture store in Fort Oglethorpe, Ga. "It's really having to think about every purchase and decision instead of buying willy-nilly."

Being deliberate about expenses is one way he's coping with the fact that sales are down more than 10 percent at the northwest Georgia store his father opened 15 years ago. He's also scaling back on inventory, making sure the schedules of his four employees are as efficient as possible and forgoing his own paycheck to make sure his workers get theirs.

More than 110 people lost their jobs this month when the Heinemann's restaurant chain, a Milwaukee institution for 86 years, shut the three restaurants that remained of what was once a 10-location chain.

"Their clientele was aging, and as they were aging and dying they weren't able to replace all those people with new people because younger people want chains they can recognize," said Jerry Kerkman, a lawyer for the company.

Customer Dennis Sell, 58, of Milwaukee, was a regular for more than a decade, ordering oatmeal pancakes and eggs, toast and sausage at Heinemann's on weekends before settling in for hours with a newspaper. He ate his last meal there on Saturday.

"I'm hoping it's a dream and I'll somehow wake up and hopefully none of this really happened," he said.

Carol Tomer wants to prevent Scandia and the bakery's 10 employees from enduring a similar fate.

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Tomer, the lead pastor at Pilgrim Lutheran Church in St. Paul, started what she called some "krumkake activism" — named after the buttery Norwegian wafer cookies — to spread word of the impending closure to the Twin Cities' large Scandinavian community.

So far, about 1,000 people have signed a petition to keep Scandia open, and business appears to be steady thanks to the community campaign, said Arvidson, the owner.

After originally thinking he would shut his doors Saturday, he spent Friday stocking up on eggs, flour and shortening and said he planned to keep selling pastries until someone padlocks his door. Even so, he knows he'll have to downsize, since he can't afford the rising rent and was unable to refinance his home to help pay the bakery's bills because rising risk from the worsening economy has brought on a general reluctance to lend.

Arvidson said he's heartened by the extra customers and community support and said business has been triple what the store normally sees in the slow weeks of January. Still, he's uneasy.

"It's weird because you feel kind of like buzzards picking at the carcass," he said.

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