Small Business Pulse Check: Modest Growth, But Inflation Is Squeezing Real Gains
The Fiserv Small Business Index for October 2025 held steady at 148, a sign of stability, but beneath the surface, the story is one of cautious consumers, stalled discretionary spending, and inflation eroding real growth.
While nominal sales rose +1.5% YoY and transactions grew +1.1%, this marks the slowest annual sales growth since February 2025. More revealing?
📉 Real (inflation-adjusted) sales fell –1.4% YoY—the steepest decline in 8 months.
“Consumers continued spending cautiously in October, pulling back significantly at restaurants and across many discretionary categories.”
— Prasanna Dhore, Chief Data Officer, Fiserv
Let’s unpack what’s driving this divergence—and where opportunity still lives.
📊 Key Trends: Where Growth Is (and Isn’t) Happening
✅ Retail: Early Holiday Spark
- Core Retail (ex-volatiles): +2.6% YoY, +1.6% MoM
- Sporting Goods: +3.0% MoM (holiday prep? gym resolutions?)
- Clothing: +1.9% MoM (back-to-school + Black Friday early deals)
- Grocery (Food & Beverage): +1.4% MoM—higher foot traffic and bigger baskets
❌ Discretionary Spending: Flatlining
- Discretionary sales: +0.2% YoY, but 0.0% MoM
- Essential goods: +2.5% YoY—widening the gap
→ Consumers are prioritizing needs over wants.
🍽️ Restaurants: Still Struggling
All segments saw declines:
|
Segment
|
Sales MoM
|
Foot Traffic MoM
|
Avg. Ticket MoM
|
|---|---|---|---|
|
Bars/Pubs
|
–0.1%
|
–0.5%
|
+0.2%
|
|
Full-Service
|
–0.1%
|
–0.2%
|
+0.2%
|
|
Quick-Service
|
–0.6%
|
–0.8%
|
+0.2%
|
People are still dining out—but less often, and spending slightly more per visit (trading frequency for quality).
🔍 Why Inflation Matters More Than Headlines
The headline +1.5% sales growth looks healthy—until you adjust for inflation.
With CPI running at ~+2.9% YoY, real small business revenue is shrinking.
This hits hardest in:
- Thin-margin sectors (restaurants, boutiques)
- Businesses unable to pass costs to customers
- Regions with stagnant wage growth
Yet retailers with strong holiday assortments and value messaging (e.g., “gift bundles,” “early-bird deals”) are bucking the trend.
📈 What’s Next? 3 Signals for November–December
- Holiday acceleration is real—but early and targeted
- Expect spikes in apparel, toys, electronics in Week 2–3 of November
- Essential resilience continues
- Grocery, pharmacy, auto parts likely to outperform
- Digital + In-Store synergy wins
- Businesses using Clover POS + online ordering saw +4.2% higher conversion (Fiserv internal data)
“Small retailers who blend convenience, value, and early gifting incentives are capturing share—even in a cautious market.”
Final Thought: Stability ≠ Strength—Yet
October wasn’t a crash. It was a pause.
Consumers are waiting—to see if prices stabilize, if jobs hold, if bonuses arrive.
For small businesses, the path forward isn’t about grand pivots—
It’s about precision:
- Double down on core customers
- Bundle essentials with small luxuries (“socks + perfume gift set”)
- Use POS data to identify real high-value shoppers (not just high-frequency)
📉 Real growth isn’t in the headline number. It’s in the 2.6% Core Retail uptick and the businesses smart enough to act on it.
How’s your small business faring this fall? Share your October story below.
Source: Fiserv Investor Relations