Ryder Chosewood opened his bespoke men’s clothing store in downtown Athens, Ga., in August 2019, eager to put to work all he had learned in school and by working in fashion stores from boutiques to Ralph Lauren. Then the pandemic struck, his customers stayed home, and no one needed to dress in stylish clothes.

“I sort of went into panic mode,” Chosewood said.

But far from ending his dreams, his business is thriving. 

The store, Kempt, is one of many small retail businesses – brick-and-mortar stores and online businesses – that have shown strength and staying power after the pandemic. The number of small retail businesses in the U.S. rose by more than 2% in 2021 after years of declines, according to data from the Census Bureau.

The numbers are surprising after years of warnings of a “retail apocalypse” and predictions that mom-and-pop shops can’t compete against the Amazons and Wal-Marts of the world. To be sure, some malls have been emptied, retail stores large and small have shuttered, and the pandemic hastened many of these trends while Amazon and big-box stores grew ever larger. 

But several factors have combined to create this moment for small businesses: technological advances that allow entrepreneurs to compete in everything from inventory to marketing, a desire among consumers for “community experience” and a willingness to pay for it, and a turn toward social media commerce. And instead of a threat, Amazon has become a platform for many small retailers to reach their customers, although that relationship is complicated. 

“It’s never been a better time to be a small business because you have all the empowerment tools,” said Josh Halpern, founder of the Obama Administration’s eCommerce Innovation Lab and creator of the largest public/private partnership on small business digital trade empowerment. “Right now, I believe strongly there is a window of time where big companies have not caught up.”

That doesn’t mean small retail businesses have an easy road. Twenty percent of small businesses fail in their first year, according to the U.S. Chamber of Commerce. Halpern noted many that succeed are side gigs that will never scale to replace the entrepreneur’s full-time job. 

Nevertheless, the number of small businesses surged during and after the pandemic, starting just four months after the shutdown in 2020, Census data show. 

In 2021, there were more than 81,000 new business applications for retail, the majority of which were for small businesses. There was a small dip the next year, but it bounced back to nearly the same number in 2023. 

It has been “the sharpest uptick in new employer applications ever” since records have been kept, said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. 

A key reason is technological advances that make it easier for small businesses to do everything from inventory to marketing to processing sales. Instead of creating a distribution network and logistics team and bringing on an ad agency, small businesses can reach a national market on Amazon, which also offers logistics tools. Social media advertising can be done in-house and target audiences for a fraction of the time and cost of using marketing agencies. 

“Tech has always been the great equalizer for small business,” Sullivan said. “It enables a small business to punch above its weight.”

Sullivan said that many entrepreneurs lept into action in March 2020 and created tech tools to address problems in transportation, logistics, and warehousing. Those tools ranged from automation to help with labor shortages to sensors that helped track supplies. As those problems were rectified, they turned to creating tech tools that help small businesses with online channels and sales platforms, he said. 

Now AI is helping, too. Halpern, who also hosts the brand interview series VanBassador, noted that in as little as 20 hours and with some help from AI, he could create a landing page, marketing campaign, and test the market response to a new product before it was even created. 

Some, like Chosewood, turned to tech that wasn’t new, but he hadn’t had time to put in place before. 

“That’s when we started our website,” he said. “We had an abundance of free time and no foot traffic.” 

He took a few classes on LinkedIn to learn about search engine optimization and then used Shopify to easily create a stylish and accessible website. 

He even made videos of people trying on clothes in his store and posted them to Instagram, which customers would comment on – connecting with each other when they were isolated at home. 

The resurgence of small retail businesses refutes the idea that they can’t compete against Amazon and big box stores. But some of the small retailers are working with Amazon, not against it.

Amazon has become a primary way for small businesses to sell their goods online. 

Known as third-party sellers, they move more than 60% of goods on Amazon, according to Retail Dive. 

One of those businesses is Lay-n-Go, which makes cosmetic bags and other cloth storage containers in its patented round, drawstring design. Amy and Adam Fazackerley, husband-and-wife entrepreneurs, started selling at trade shows and had a good run on QVC and other stores including Target and Costco over the years. But now they are focused on two platforms: their own website and Amazon. 

“About three years ago, we very intentionally went direct to consumer,” Adam Fazackerley said.

By using Amazon’s warehouses and online management tool, they benefit from the speed that Amazon's fulfillment network offers. In addition, if items sell out in Amazon warehouses, as often happens during the holidays, the Fazackerleys are able to route orders to their own warehouses with a click of a button. 

But if they sell their bags anywhere else at a lower price, Amazon will match it. 

The biggest problem they have is other sellers, often based in China, offering cheap knock-offs of their product. Since they hold several patents and have won a previous case against infringers through an Amazon program, the Fazackerleys can report copycats to Amazon for removal. But they said that is a daily effort.

Other small businesses have faced more difficulties. Because Amazon is such a huge company with many parts of its business outside of retail, it can use the profits from those other divisions such as web services to subsidize its retail division and actually sell goods at artificially low prices to drive out competitors. 

In addition, those other services such as warehouses and inventory cost small businesses significant fees and they have few other options, said Ron Knox, a senior researcher at the Institute for Local Reliance, a nonprofit group that advocates for independent businesses. 

“They’re kind of stuck in this very difficult place where they’re getting charged a lot of money just to sell on Amazon and it has this domino effect on their ability to sell online overall,” Knox said. 

Despite these challenges, small businesses are continuing to thrive. Barbara Kahn, a professor at the Wharton School of Business and author of “The Shopping Revolution,” said she never believed that it was the end of retail, only the end of bad retail. 

“Don’t write off the small businesses yet,” she said.

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