Small retailers, those mom-and-pop shops lining the Main Streets of America, are showing signs of recovery after getting hammered by the pandemic, high rents and inflation.
Along with the big boxes, discounters and mass chains, small shops are riding the wave of consumers returning to in-person shopping after submerging themselves in e-commerce for two years. There’s also some evidence, both anecdotal and from survey research, of an uptick in loyalty to local proprietors.
“Through the pandemic people started to realize how important small businesses are to their community,” said Mary Jo Pile, owner of three contiguous stores along Brooklyn’s Atlantic Avenue: Collier West, selling vintage and antique furniture, art, gifts, chandeliers, bath and body products and jewelry; Collier West Annex art gallery, and the Collier West Rugery.
“The pandemic brought home to people in many cases that we are the fabric of the community. Every day, two or three people tell me they want to shop local. I do hear that much more post-pandemic. The allure of the mall has been slipping away.”
Regarding business so far this year, Pile said: “March was phenomenal. In April business started a little tough, but we will bounce back. I feel pretty confident. I don’t have any complaints about business. People will always buy gifts. They want to celebrate. I am starting to see tourists again. That was the missing part. It’s parents coming to visit their kids living in Brooklyn, business travelers returning again, and a lot of Australians, French and people from the U.K.”
For Charles Mayer & Co. in Indianapolis, a shop with 4,000 square feet of selling space for tableware, European home furnishings, decorative accessories and gifts: “This whole year has been amazing, and we had a strong year last year,” said owner Claudia Ryan. “We’ve been seeing more brides than ever for our bridal registry. April was a great month, even better than 2019.”
Ryan senses momentum will be sustained, with the Indy 500 auto race on May 29 bringing crowds to the city, and Mother’s Day, which is Sunday.
“People are very appreciative of the level of service a smaller store can offer,” said Ryan. “I am often told there aren’t that many stores around the country providing the level of service that we do. There are fewer stores that go the extra mile, working with customers, customizing, monogramming. We also do a lot of events and benefits. That’s how you stay connected to customers.”
During the pandemic in 2020, Charles Mayer closed for three months, though customers could pull up in their cars to receive items ordered by phone or online. There was also by-appointment in-store shopping, for social distancing. “I wasn’t going to not keep my business moving forward,” said Ryan. “People called all the time, looking for this and that, and saying, ‘I just want to come in and shop.'”
On Monday, the ICSC, a trade organization promoting marketplaces, neighborhood and lifestyle centers and other venues for shopping, dining, working and entertainment, released its Small Business Consumer Survey, conducted March 14 to 16 this year. Of the 1,009 adults responding, 68 percent indicated the pandemic inspired them to support small businesses more than they would have previously, while 75 percent said they recently became more aware of the importance of small businesses in preserving communities and will increase support for them in the future.
In addition, 56 percent noted it’s “very important” to shop at or use the services of small businesses, and 81 percent said a mix of small businesses increases “the vibrancy of their local community.”
“Our survey clearly shows that consumers support the small and local businesses in their communities, which ultimately will support their continued growth and long-term success,” Tom McGee, ICSC’s president and chief executive officer, told WWD. “While some small businesses continue to face challenges, overall, increasing retail sales and strong consumer spending are evidence that they are rebounding from the pandemic and returning to normal operations as consumers flock to stores.”
Though hard to document, it’s possible that government campaigns supporting small retailers have had some effect in shifting consumer spending attitudes. The country is in the midst of “National Small Business Week,” which runs through Saturday. It’s an invention of the Small Business Administration to promote small businesses through public messaging, virtual seminars and programs, though this year the agenda seems overshadowed by the war in Ukraine, the potential Supreme Court ruling on abortion, resurging cases of COVID-19 and inflation worries.
Last Monday in New York City, Mayor Eric Adams and Commissioner Kevin D. Kim of Small Business Services kicked off National Small Business Week, unveiling five days of events to raise awareness of what SBS offers and encourage New Yorkers to shop local. They also revealed an updated Shop Your City website, digital and print ads in community and ethnic media running through May and June, and a Small Business Advisory Commission of small business leaders from the boroughs “tasked with helping the city cut red tape, improving business services and programming, and promoting an equitable, broad-based recovery.”
Since 2010, American Express has sponsored “Small Business Saturday” to encourage gift shopping at small retailers on the Saturday after Thanksgiving. The results of the AE’s 2021 “Small Business Saturday Consumer Insights Survey” showed projected spending among U.S. consumers at independent retailers and restaurants on Small Business Saturday reached an estimated $23.3 billion, up 18 percent from $19.8 billion in 2020 and similarly from the $19.6 billion spent on the pre-pandemic 2019 Small Business Saturday.
Small Business Saturday, however, “Actually does create some energy,” Pile added. “People typically do go to the mall that weekend but American Express has really pushed Small Business Saturday. It helps a bit, not dramatically. You get pretty good traffic anyway on the Saturday after Thanksgiving.” Regarding National Small Business Week: “I don’t think many small businesses know about it,” said Pile. “I guess I missed the memo.”
“They’re nice reminders, not the whole story,” said Ryan, when asked if those events impact her business. “It has more do with how businesses operate, the mix, and how they work with customers on a day-to-day basis.”
“There is a propensity to visit local retailers more than before. The pandemic did boost local loyalty,” observed Jennifer Stevenson, head of product strategy for Uberall, a SaaS company that helps small retailers get noticed on search and social media platforms such as Google and Facebook, helping to level the playing field with large retailers.
“Convenience and immediacy are really important to consumers,” said Stevenson. If someone is looking for a burrito, for example, Stevenson said, Uberall technology enables the small local retailer near where the consumer lives to come up on a search, as an option to the Chipotle also popping up on the search. Or if someone is searching for a Nike sneaker, a local retailer nearby could come up on a search for that particular SKU, so you could pick it up right away, instead of ordering it from Nike and getting it delivered later.
“We support small businesses, when people search for what’s near them. Uberall realizes that Google and social media are the great equalizers,” she said.
In September 2021, Uberall surveyed 8,857 adults in the U.S., U.K., Germany and France, inquiring about shopping behavior, loyalty to retailers and what makes for a great customer experience. Sixty-eight percent of the respondents said that at least half of their search activity has local intent, meaning they want a retailer near them and not a drive away. Also, 67 percent said they trust businesses in their area more than online-only businesses, and 55 percent responded they are more likely to feel an emotional connection to businesses in their area.
Uberall’s survey also asked where the highest customer experience expectations lie — 41 percent said at independent local businesses; 38 percent said local stores that could be part of a national chain but not necessarily, and 20 percent replied e-commerce websites.
Craig Johnson, president of Customer Growth Partners research and consulting firm, questions whether there’s been a significant shift to spending more at independent, smaller retailers.
“It’s true that more people like shopping off the mall, rather than going to the traditional mall. While they limit trips to the mall, they may be going to small local shops, they are mostly going to Target, Costco, TJX [Cos.], Burlington and Best Buy,” Johnson said. “Collectively I would be dubious [that] small retailers are getting a bigger piece of the pie, and for a lot of smaller shops rents have gotten so crazy. Folks are telling me, ‘Anything we make this year has to go to pay the landlord.’ It’s very tough to survive with rents going through the roof. Those who are lucky enough to own their real estate and those that are well run will survive.”
Still, ICSC’s survey indicated that 54 percent of consumers are spending at small businesses at least once a week and 42 percent frequent establishments more now than before the pandemic. The survey stated that 52 percent of small business shoppers want to keep money local, 49 percent enjoy the quality of goods and services, 47 percent enjoy the convenience, and 46 percent prefer the price and value of the products.
“Small businesses are the lifeblood of the economy and make up 70 percent of marketplace tenants. They were among the hardest hit during the pandemic, but are making a strong comeback based on continued consumer demand,” said ICSC’s McGee.
According to government statistics, in the U.S. there are 32.5 million small businesses. Over 99 percent of firms in the U.S. are small businesses.
The government has a complicated formula for designating businesses as small based on volumes and employee headcount criteria that vary depending on the sector. More than half of small businesses are home-based, and about one out of every five firms in the U.S. are family-owned. Attrition is high among small businesses, with roughly half making it past the five-year mark and about a third lasting 10 years or more.
In January Goldman Sachs released a survey of 1,466 small businesses, in conjunction with Babson College and David Binder Research, with the headline, “Small Businesses on the Brink.” The survey showed that 71 percent of small business owners said the rise of the Omicron variant negatively impacted revenue; 37 percent were forced to temporarily scale back operations because of the variant. Outside of pandemic issues, the survey revealed that 50 percent of the respondents felt finding and retaining qualified employees was their number-one problem; 19 percent cited supply chain issues as the number-one problem, and 18 percent cited inflation as the most significant problem.
Seventy-six percent said their business was hurt by inflation in the second half of 2021; 36 percent said 2021 was a tougher year than 2020, but 73 percent of the small business respondents said they were optimistic about the financial trajectory of their business in 2022.
Earlier this week, Isabella Casillas Guzman, head of the U.S. Small Business Administration, said America is experiencing “an unprecedented wave of entrepreneurship and new business creation under President [Joe] Biden and Vice President [Kamala] Harris” and that more Americans applied to start a business in 2021 than any other year on record. On average, about 6.5 million businesses are started in the U.S. each year, and about three-fifths of new jobs in the country come from small businesses.
Casillas Guzman said: “During President Biden’s first year, the SBA delivered more than $450 billion in financial relief for small businesses. As a result, mom-and-pop shops in communities across the country were able to keep their doors open, protecting millions of jobs and stabilizing countless local economies. The support the Biden administration delivered is enabling millions of America’s entrepreneurs and small business owners to regroup, reinvest in themselves and their businesses, and build the next chapter of their American dreams.”
