2017 has been a rough year for retail.
More than 1,000 stores closed in a single week in June, and Macy’s has cut thousands of jobs as part of the retail apocalypse. Earnings announcements by department-store chains Kohl’s, Macy’s and Dillard’s on Thursday revealed a mixed bag of results as these big-box retailers try to turn around their fortunes.
With so many major retailers struggling to stay afloat, it’d be easy to think smaller, mom-and-pop stores are doing even worse, or might be largely fading away. The recent demise of retail giants, however, has left a brick-and-mortar vacuum for local stores to fill.
And many experts say it might be best to stay small. Being a micro-sized business certainly isn’t protection against big-box retailers or online competitors, but being a small business that’s an integral part of a local community can help build a loyal customer base.
“The vast majority of mom-and-pop businesses are either neighborhood retail businesses or small service businesses,” says Leonard Schlesinger, Baker Foundation professor at the Harvard Business School. “As neighborhood businesses, they play a significant role in neighborhood stabilization, [providing convenience for people living close by].”
That stabilization comes in the form of convenience. People living close by don’t have to drive long distances to get a manicure or find specialty foods or have an intimate dinner.
That’s especially true in ethnic neighborhoods, adds John Grabowski, Krieger-Mueller, joint professor in history at Case Western Reserve University. While the competition has increased, many small businesses in areas that have a predominant ethnic group have shown a knack for survival, whether by stocking specialty foods that big chains don’t carry or adding a personal touch to shopping that’s lacking at larger and online stores.
“The ‘villain’ for many years has been Wal-Mart and the big-box stores,” he says. “Now we’re looking at Amazon and online marketing. [But] you can still see ethnically owned stores operated in ethnic neighborhoods, like Korean stores in Los Angeles, thriving.”
The longevity of micro businesses in ethnic neighborhoods is a topic Asian-American historian Shelley Sang-Hee Lee explored in a 2015 paper looking at Asian-Americans and the 1992 Los Angeles riots.
“Ongoing demographic change in Los Angeles since 1992 has shown that the conversation with regard to America’s multi-ethnic population is an evolving one,” she wrote. “Twenty years after the riots, Korean Americans still dominated mom-and-pop stores in South Los Angeles, but ‘Korean-black conflict’ no longer dominated the discussion on race relations in the area.”
Other dynamics are giving local mom-and-pop stores an edge, according to retail experts. Consumers are increasingly interested in artisanal and locally produced items that are often perceived as higher quality. They are also seeking more authentic experiences from unique store environments small shops can offer. And technology has allowed mom and pops to gain exposure around the world without expanding their footprint by leveraging the power of social media and targeted marketing.