Small Business Retails’ Last Chance

Small Business Retails’ Last Chance By Bill Scott

Chapter One – Empty Storefronts

On the accelerating disappearance of independent retail and what we are really losing

The hardware store on Magnolia Street in Laurel, Mississippi had been there so long that old-timers had stopped being able to remember a time before it. Learn more about this in A Warning For the Next 250 Years.

Dawson’s True Value — though by the end it was just Dawson’s, the True Value sign having come down quietly a few years back when the franchise arrangement stopped making sense — had occupied the same broad-fronted, tin-ceilinged building since the post-dep ression years following 1938.

Three generations of Dawsons had sold nails and pipe ﬁttings and garden seed and screen door hinges from behind a counter worn smooth and dark with the oils of ten thousand hands.

The place smelled the way hardware stores used to smell: machine oil and sawdust and something faintly mineral, like river clay. The ﬂuorescent lights buzzed. The wooden ﬂoors announced your arrival with a creak that felt, if you’d grown up there, almost like a greeting. Crates of yet to be open ed stock served as chairs if you cared to sit down and have a conversation with one of the Dawsons running the old hand cranked cash register. Your receipt was written on scraps of white paper stacked on the counter for that speciﬁc purpose.

Earl Dawson, the third of his name to run the store, closed it on a Thursday afternoon in February 2023. He didn’t hold a going-out-of-business sale. He couldn’t bring himself to. Instead, he spent two weeks quietly selling off inventory to contractors he’d known for longer than he cared to remember, giving away a few things he thought particular neighbors might need, and one morning, before sunrise, he drove to the building alone, unlocked it for the last time, walked the aisles for a long while, and then locked the door behind him. The key, he told his daughter later, felt heavier coming out than it ever had going in. He was sixty-four years old, and there was nobody to whom he could sell what he’d built. Not at any price that made sense. Not in a world where a customer could walk into his store, photograph the universal product code off a box of weather stripping, and buy the same item from Amazon for two dollars cheaper before they reached the front door and their pick-up parked in the front of the store. Parking was no problem. Hadn’t been for a dozen years.

Mr. Laﬁte’s “gas station” at the end of the block shut down long before Earl Dawson’s hardware store. Its rusty old Esso sign leaned some forty-ﬁve degrees as if it was longing to rest on the cracked concrete beneath it, and the two rusty gas pumps, one missing its hose completely, were situated as if spectators to the decay.

Earl’s story is not exceptional. It is, in the America of the mid -2020s, commonplace. The storefronts sit empty on main streets from Pittsburg, Pennsylvania to San Diego, California. The painted signs fade. The plate glass windows, once crowded with merchandise arranged by hands that knew their customers, go gray with dust. “For sale” signs appear, then disappear, then appear again. A few buildings are repurposed — a yoga studio here, a real estate office there — but in many small towns, no repurposing comes. The vacancy just becomes part of the landscape, like a missing tooth, noticed most by the tongue.

The hardware store on Magnolia Street in Laurel, Mississippi had been there so long that old-timers had stopped being able to remember a time before it. Dawson’s True Value — though by the end it was just Dawson’s, the True Value sign having come down quietly a few years back when the franchise arrangement stopped making sense — had occupied the same broad-fronted, tin-ceilinged building since the post-depression years following 1938. Three generations of Dawsons had sold nails and pipe ﬁttings and garden seed and screen door hinges from behind a counter worn smooth and dark with the oils of ten thousand hands. The place smelled the way hardware stores used to smell: machine oil and sawdust and something faintly mineral, like river clay. The ﬂuorescent lights buzzed. The wooden ﬂoors announced your arrival with a creak that felt, if you’d grown up there, almost like a greeting.

Earl Dawson, the third of his name to run the store, closed it on a Thursday afternoon in February 2023. He didn’t hold a going-out-of-business sale. He couldn’t bring himself to. Instead, he spent two weeks quietly selling off inventory to contractors he’d known for thirty years, giving away a few things he thought particular neighbors might need, and one morning, before sunrise, he drove to the building alone, unlocked it for the last time, walked the aisles for a long while, and then locked the door behind him. The key, he told his daughter later, felt heavier coming out than it ever had going in. He was sixty-four years old, and there was nobody to whom he could sell what he’d built. Not at any price that made sense. Not in a world where a customer could walk into his store, photograph the product number off a box of weather stripping, and buy the same item from Amazon for two dollars less before they reached their pickup truck.

Earl’s story is not exceptional. It is, in the America of the mid-2020s, commonplace. The storefronts sit empty on main streets from Waynesboro, Mississippi to Walla Walla, Washington. The painted signs fade. The plate glass windows, once crowded with merchandise arranged by hands that knew their customers, go gray with dust. For sale signs appear, then disappear, then appear again. A few buildings are repurposed — a yoga studio here, a real estate office there — but in many small towns, no repurposing comes. The vacancy just becomes part of the landscape, like a missing tooth, noticed most by the tongue.

If Wall Street is the economic industry that drives the American economy, independent retailers are its soul.

Can we eventually win this battle permanently? “No”.

Can we turn this trend around? “No” to that as well. The advancements in Artiﬁcial Intelligence alone all but ensure independent retailers’ demise.

But we can go down with a ﬁght and learn how to survive in this new environment. It’s going to take work, and we are going to have to learn how to convince our partners to help us, not for just our beneﬁt mind you, but for the beneﬁt of our stubborn business partners as well. If we go, they go. So, if you happen to be part of the problem, take heed. If we go, you go.

We have grown so accustomed to these empty storefronts that we have almost stopped mourning them. That normalization is, in itself, a kind of crisis. This story is an attempt to push back against that numbness — to look directly at what is happening to independent retail in America, to understand why it is happening, and to reckon honestly with what we lose when it goes.

The numbers are staggering, and they are accelerating. By November 2024, according to data tracked by Coresight Research, store closures across the United States had reached 6,481 for the year — the highest single-year total since the height of the pandemic shutdowns in 2020, and a signiﬁcant jump from the 5,553 closures recorded for all of 2023.

Those ﬁgures, it must be noted, capture primarily announced closures by major chain retailers. The quiet, undocumented closures of independent retailers — the Dawsons of America, the Mr. Laﬁtes don’t issue press releases when they lock their doors — are not fully captured by any dataset. The real number is almost certainly much larger.

The National Federation of Independent Business has long estimated that roughly half of all small businesses don’t survive their ﬁfth year, and for independent retailers the odds are grimmer still, operating in categories where margins are thin, competition is relentless, and the structural advantages held by large competitors are enormous and growing.

The commercial vacancy rate tells a parallel story. After sitting at a historically low 2.5 percent in the third quarter of 2023, the national retail vacancy rate climbed to 4.1 percent through the ﬁrst half of 2024, according to data from Colliers. But that average conceals the genuine devastation in small-town commercial districts, where vacancy rates in some downtown corridors have climbed above twenty or thirty percent. Walk the main street of any county seat in rural America:

In Lawrence County, Mississippi, Polk County, Florida, Caddo Parish, Louisiana, Los Angeles County, California — in any of your state’s twenty poorest counties — and you will not need a spreadsheet to understand what is happening. You can count the empty buildings yourself.

The economic consequences of this emptying are well documented and deeply troubling.

Independent retailers are among the most signiﬁcant contributors to local tax bases. A locally owned retail business returns a substantially larger share of each revenue dollar to the local economy than a chain operation does — through local wages, local banking, local professional services, and local philanthropy.

The Institute for Local Self-Reliance has repeatedly found that locally owned businesses recirculate approximately 48 cents of every dollar earned back into the local economy, compared to roughly 14 cents for chain retailers. When Dawson’s Hardware closed, that differential vanished. Earl Dawson’s accountant doesn’t have a client. His bank doesn’t hold his operating account. The sign painter who updated his window display doesn’t get the call. The ripple effect is not metaphorical. It is arithmetic.

But there is a dimension of this loss that no spreadsheet captures, and it may be the most important one. Independent retailers are civic anchors.

They are places where the community talks to itself. Earl Dawson knew, without looking it up, which of his regular customers had just lost a spouse, which ones had a kid starting a home improvement project, which contractor was branching out into tile work and might need a new supplier relationship. Walmart doesn’t know that. Lowe’s doesn’t know that. And neither does Home Depot.

Industry leaders take great pride in reminding us that Artiﬁcial Intelligence will not take over entirely because people still want that personal relationship, they like to be treated with respect, enjoy a conversational exchange that robots will never be able to provide. I say, “I get it”. That’s why customers are okay with talking to computers when they need customer service, go online to ﬁnd out how to return something they didn’t really want, and click on a picture of what we think we want instead of going to a store, picking it up and holding it in our hands.

That knowledge — granular, relational, accumulated over decades — is not a quaint anachronism. It is the connective tissue of a functioning community. When the store closes, something is severed that no online platform can replace, no matter how sophisticated its recommendation algorithm. You can buy weather stripping from Amazon. You cannot get it from someone who knows your name.

This article is about why independent retailers are dying. Not all of them, and not everywhere — there are survivors, and we will spend time with them in Chapter Nine, studying carefully what they have in common. But the trend line is unmistakable, and the forces driving it are not abstract. They have names, addresses, stock tickers, and lobbying budgets. Amazon, Walmart, predatory lenders. With indifferent regulatory bodies, and demographic shifts. Succession vacuums. Each chapter of this article will examine one of these forces in depth, with the evidence laid plainly on the table.

The argument this article makes is not that change is wrong or that nostalgia is a policy. Markets evolve. Consumer preferences shift. The horse-drawn plow gave way to the tractor; the independent grocer gave way — in part — to the supermarket; and the supermarket is now contending with its own disruptions. No one should pretend otherwise. But there is a profound difference between markets evolving through fair competition and markets being systematically distorted by structural advantages, policy failures, and capital imbalances that tilt the playing ﬁeld so severely that the game becomes unwinnable for the smaller player. That is what is happening to independent retail in America. And we are allowing it to happen — through our shopping habits, our regulatory choices, our lending frameworks, and our indifference — while telling ourselves it’s just the market working.

The market is working, all right. The question is: working for whom?

Start there. Start on Magnolia Street in Laurel, Mississippi, in a building that smells of machine oil and memory, with a key that feels heavier coming out than it ever did going in. Then follow the money.

• * *

Chapter Two – The Amazon Effect

How e-commerce rewrote the rules of retail — and why independent stores couldn’t keep up

Margaret Tatum had owned Page & Vine Books and Gifts for nineteen years when she ﬁrst noticed the phones. It wasn’t that customers had started carrying them into her store — they’d always done that, even back in the early days of the smartphone. It was what they started doing with the cameras.

A woman would pick up a coffee -table book about Southern gardens, ﬂip to the back cover for the price, and then — almost without thinking, a gesture as reﬂexive as checking a watch — point her phone at the barcode on the back. A few seconds of silent consultation with the small glowing screen. Sometimes she’d put the book back. Sometimes she’d buy it. But increasingly, she’d put it back. “They’re shopping in my store,” Margaret told a friend over supper one evening in 2019, “but they’re buying somewhere else.”

She called it “the scan and leave,” though the industry had a more clinical name for it: showrooming.

Customers use physical retail stores as discovery environments — touching, smelling, examining, asking questions — and then purchase the same item online, usually from Amazon, at a lower price, often with free two -day shipping. The independent retailer bears all the costs of that experience — the rent, the staff, the inventory, the heat in winter and the air conditioning in summer — and receives none of the revenue. The store becomes, in effect, a free showroom for Amazon. It is a breathtaking transfer of value, hiding in plain sight behind the casual gesture of a phone camera.

Margaret closed Page & Vine in 2022. She was not bitter about it, or at least she tried not to be. She spoke carefully when she talked about what had happened, choosing her words the way a person does when they’ve spent a lot of time trying to understand something painful rather than simply resenting it. “Amazon didn’t invent the desire to save money,” she said. “It just weaponized it. And it gave people a way to do it that felt completely painless — you’re not really hurting anyone, you’re just clicking a button. But the store closes. And then it’s gone. And then the town is a little less itself.”

Amazon was founded in 1994 as an online bookstore — a detail that carries a particular irony for every independent bookseller still standing. By the mid- 2020s, it had captured more than 40 percent of all U.S. e -commerce sales, according to projections from eMarketer, a share so dominant it has few parallels in the history of American retail. In nearly every product category — books, electronics, household goods, clothing, toys, sporting goods, health and beauty products — Amazon’s sales growth has outpaced the broader market by signiﬁcant margins. Its infrastructure is staggering: over 150 fulﬁllment centers in the United States alone, a proprietary logistics network that rivals UPS and FedEx, a ﬂeet of aircraft, and a last-mile delivery system sophisticated enough to get a package to a porch in rural Montana within two days of an order being placed.

But the raw logistics, impressive as they are, are only part of the story. What Amazon truly sells — what it has always sold, beneath the surface of whatever product is in the box — is certainty.

Amazon Prime, launched in 2005, reengineered the American consumer’s psychological relationship with the act of shopping. For a ﬂat annual fee, Prime members receive unlimited free two-day shipping, free streaming video and music, early access to deals, and a constellation of other beneﬁts that have made the service so deeply embedded in household life that canceling it feels, to many subscribers, almost unthinkable.

As of 2024, Prime had an estimated 180 million members in the United States alone. When a person pays for Prime, they have already, in a sense, purchased their loyalty. Every purchase made elsewhere is a purchase made despite Prime — an active choice to pay more and wait longer, or to drive somewhere and park. For many consumers, that friction is simply not worth it. The path of least resistance runs directly through Amazon’s checkout screen.

The effect on independent retailers is not merely competitive. It is existential, and it operates along multiple vectors simultaneously.

First, there is the price problem. Amazon’s algorithmic pricing — its systems adjust prices on millions of items millions of times per day, responding in real time to competitor pricing, demand signals, and inventory levels — allows it to consistently undercut independent retailers on price without ever having to do so at a human scale. The independent hardware store in Monticello, Mississippi cannot check Amazon’s price on every one of its twelve thousand SKUs every morning and adjust accordingly. Amazon’s computers can. The result is a persistent, structural price disadvantage for the independent operator that no amount of buying efficiency or supplier negotiation can fully overcome.

Second, there is what we might call the search suppression problem. When a consumer types a product name into Google, the search results increasingly favor Amazon listings, whether through paid placement, organic authority built on billions of customer reviews, or Google’s own shopping tools that tend to surface large- platform results ﬁrst. Independent retailers who sell online ﬁnd themselves competing not just against Amazon’s prices but against Amazon’s visibility. Their own web presence — however carefully constructed — is effectively buried. A small gift shop in Boise, Idaho that builds a Shopify store and photographs its handmade candles and writes thoughtful product descriptions may ﬁnd, when a potential customer types “handmade soy candles Idaho” into Google, that Amazon — which carries similar products from a hundred vendors — appears ﬁrst. The independent retailer’s digital front door is hidden behind a corporation that generates more daily web traffic than most countries have internet users.

Third — and this is the subtlest and perhaps most corrosive dimension of the Amazon Effect — there is the expectation problem. Amazon has so thoroughly colonized the American consumer’s sense of what shopping should feel like that independent retailers are now judged by a standard they can never meet.

When Margaret Tatum’s customers found a book for two dollars less on Amazon with free shipping, they weren’t necessarily making a cold-blooded economic calculation. Many of them genuinely liked her store. They loved the recommendations, the community events, the smell of the place, the conversations. But Amazon had recalibrated their sense of what was reasonable to pay. Two dollars had become a meaningful difference. It hadn’t always been. Amazon didn’t just steal market share from independent retailers. It stole the consumer’s tolerance for the premium that a beautiful, locally owned, expertly curated store legitimately commands.

The situation is further complicated by Amazon’s marketplace, which simultaneously positions the company as a potential lifeline and a structural threat to small retailers. Amazon does allow independent sellers to list products on its platform — and many small businesses, particularly product makers and specialty retailers, have built meaningful revenue streams there. More than 60 percent of Amazon’s own sales, by some measures, now come from third-party sellers. But the terms of that relationship are set entirely by Amazon. Fees charged to marketplace sellers — including referral fees, fulﬁllment fees for those using Amazon’s warehouses, and subscription fees — routinely consume 30 to 50 percent of revenue for many small operators. Amazon’s own private-label products compete directly with successful third-party sellers on the same platform, often appearing in more prominent positions. Sellers who build their customer base on Amazon ﬁnd themselves renting space in a marketplace where the landlord is also their most powerful competitor. Contracts can be changed unilaterally. Listings can be suppressed. Accounts can be suspended with minimal recourse.

There is no easy answer to the Amazon problem — no policy lever that restores the pre-digital competitive landscape, no consumer campaign sufficient to reverse two decades of habit formation. But understanding the depth and complexity of what Amazon has done to the competitive environment for independent retail is essential to understanding why so many Main Street businesses are struggling despite the genuine quality of what they offer. The problem is not that independent retailers are inferior. The problem is that they are competing in a game whose rules have been rewritten by an entity with essentially unlimited capital, an unmatched distribution infrastructure, and a two-decade head start on capturing the American consumer’s imagination.

Margaret Tatum did not fail. She was overwhelmed — by forces she could name but not stop, by a transformation so large and so swift that even its architects could not have fully anticipated it.

Page & Vine Books and Gifts is a coffee shop now. It’s a nice enough place. But they don’t carry Southern Garden books, and nobody there knows your name.

• * *

Chapter Three – The Big Box Shadow

Walmart, Home Depot, and the geography of retail dominance

The Walmart came to Petal, Mississippi — a town of about ten thousand people in Forrest County, just east of Hattiesburg, MS — in the autumn of 1997. People remember it the way they remember other civic milestones: a job transfer, a ﬂood, a new school being built. The grand opening drew a crowd that wrapped around the parking lot. The mayor cut a ribbon. There were balloons. For a certain kind of town, a new Walmart carries the particular excitement of arrival — the sense that you have been noticed by the economy, that growth is coming, that your community is real enough to merit this attention. The feeling does not always last.

Within three years of the Petal Walmart’s opening, six businesses in the surrounding commercial corridor had closed: a hardware store, a women’s clothing shop, a shoe store, a sporting goods dealer, a garden center, and a variety store that had sold everything from birthday cards to cast-iron cookware since the Eisenhower administration. The owners of those businesses did not blame Walmart alone — several of them cited the broader economy, their own age, changes in the market. But none of them could say, with a straight face, that the timing of their closure and the arrival of a Supercenter selling identical or near- identical products at prices they could not match was a coincidence. Economics doesn’t work on coincidences.

The Walmart Effect — a term popularized by journalist Charles Fishman in his 2006 book of the same name — has been one of the most studied phenomena in American economic geography. The research ﬁndings are contested at their margins but clear at their core: when a Walmart Supercenter enters a market, it extracts signiﬁcant business from surrounding independent retailers, particularly in categories where it competes most directly — apparel, housewares, hardware, grocery, sporting goods, and garden. A comprehensive review of economic literature on the subject found that small retailers often struggle severely to compete with Walmart’s lower prices and extensive product selection, leading to reduced foot traffic and potential closures. The company’s pricing strategy consistently runs ten to twenty-ﬁve percent below competitors on comparable items — not through magic, but through ruthless supply chain discipline, massive volume leverage, and a willingness to accept very thin or even negative margins on certain items in order to draw customers into the store.

Walmart’s arrival in rural America in the 1980s and 1990s was not random. It was strategic, geographic, and deliberate.

Sam Walton himself articulated the core insight: identify markets that regional and national chains had overlooked — small to mid-size towns without existing discount retail — and dominate them before competitors could respond. By the time a community understood what was happening to its downtown retail base, Walmart was already fully established, the local incumbents were already weakened, and the sunk cost of the Supercenter’s construction made retreat essentially impossible. It was a form of retail manifest destiny, and it was executed with extraordinary discipline.

The loss-leader tactic deserves particular attention in any honest accounting of the big box effect on independent retail. A loss leader is a product sold at or below cost speciﬁcally to draw customers into a store where they will also purchase higher-margin items.

Walmart, with its colossal balance sheet, can afford to lose money on individual product categories for extended periods in order to win traffic. An independent hardware store cannot.

When Walmart prices a box of deck screws at a dollar below its own cost, the independent hardware store across town faces a brutal choice: match the price and bleed, hold the price and lose the customer, or exit the category entirely and hope something else ﬁlls the revenue gap. None of those choices is good. All of them weaken the independent operator’s position.

Home Depot has performed a similar role in the hardware and home improvement sector. Founded in 1978 and expanding rapidly through the 1980s and 1990s, Home Depot brought to the hardware business what Walmart brought to general merchandise: massive scale, sophisticated logistics, supplier leverage, and a price point that most independent hardware stores simply cannot match. The company now operates more than 2,300 locations in the United States. By contrast, the National Hardware Show — the industry’s primary trade event — reports that the number of independent hardware stores has fallen by more than half since the 1980s. What was once a landscape of local, owner- operated hardware dealers has been consolidated, for the most part, into two national giants: Home Depot and Lowe’s.

The independents who have survived — and some have, with remarkable tenacity — have done so by ﬁnding niches that the big boxes structurally cannot ﬁll, a story we will return to later.

Geographers and urban planners have documented what they sometimes call the “donut effect” of big box retail development — the way large-format stores, typically located at the edge of town where land is cheap and highway access is easy, hollow out the traditional commercial core. Customers follow the traffic to the edge; the center empties. The downtowns of hundreds of small American towns now bear the physical signature of this process: anchor buildings vacant, remaining businesses clustered together as if for warmth, parking lots cracked and weedy, storefronts that once housed the full commercial life of a community now offering, at best, a mix of hair salons, dollar stores, and payday lenders. The irony is profound. The donut effect was sold to communities as economic development. What it produced, in many cases, was economic geography — the appearance of retail activity without the substance of local economic return.

The supply chain leverage that Walmart and Home Depot exercise over their vendors also has indirect consequences for independent retailers. When Walmart tells a manufacturer of, say, paint or plumbing supplies that it requires a price concession of ten per cent in exchange for shelf space in four thousand stores, the manufacturer typically complies — and often does so by cutting costs elsewhere, including sometimes by offering less favorable terms to their smaller retail customers. Independent hardware store owners have long complained that they pay more for the same products than big box competitors do, purchasing in smaller volumes and receiving less favorable credit terms, longer lead times, and less promotional support. The system is not designed to punish them — it is simply designed for scale — but the effect is punitive nonetheless.

My own personal experience:

In 1977 while living in Loveland, Colorado, I made the decision to purchase a 21” RCA color television. Some of you may recall that in those days, high-end televisions doubled as attractive pieces of furniture. Boxes made of polished mahogany or walnut that added character to any living room, attractive even when turned off.

There were two choices: Buy the set from a local store or travel 40 miles to Denver and buy the same set from Sears for $50 less. I made what I considered the right choice and opted to buy locally.

The dealer’s technician delivered the set to our home, set it up, optimized the color and patiently taught my wife and I how to use the remote. After the installer drove away from our home, I congratulated myself on making the right decision.

A few days later we encountered a small problem. I made a call to the dealer and 30 minutes later the technician showed up, made the minor adjustment and left. “It would have taken Sears a week to send a technician from Denver,” I told my wife.

A month later I called the local dealer with a question and there was no answer. Thinking there must be a problem with the telephones, I drove to the store and to my surprise the dealer had gone out of business. I ﬁnally tracked him down and he told me that Sears was selling TVs and other appliances cheaper than he could source them from the manufacturer. Little by little, more and more businesses began to shut down.

None of this is to argue that big box retail has produced no beneﬁts for American consumers. Lower prices are real. Product selection is real. The savings to a low-income family who can stretch their dollars further at big box retailers or Amazon are real and should be acknowledged honestly. The argument here is not that big box retail is evil. The argument is that its growth was aided by structural advantages — zoning rules that favored highway -edge development, tax incentives offered by communities desperate for any economic signal, regulatory frameworks that did not account for the externalized costs of downtown hollowing — and that those structural advantages created an uneven playing ﬁeld from which independent retailers have never recovered. The game was not fair. And we should at least be honest about that.

• * *

Chapter Four – The Cost Squeeze

Rent, labor, insurance, and the margins that vanished

Darlene Hooper spread the papers out on the kitchen table on a Tuesday evening in March, the same way she’d done every month for the past eleven years. The habit was almost superstitious: she used the kitchen table because she’d always used the kitchen table, back when she and her mother had run the numbers together, back when the numbers had been easier to live with.

Hooper’s Fine Gifts and Home occupied a 2,200- square-foot storefront in the old Merchants Building in Osceola, Arkansas — a beautiful old space with twelve- foot ceilings and original tile ﬂoors — and Darlene had always been proud of it. She was still proud of it. But on this particular Tuesday, the pride was harder to sustain. The numbers told a story she did not want to hear.

Revenue for February had been $42,000. That was decent — respectable, even — for a gift shop in a town of six thousand people in the middle of winter. But then came the subtractions. Rent: $3,800 a month, up from $2,600 ﬁve years ago, when her landlord had quietly explained that he’d had to adjust for what he called “market conditions.” Insurance — commercial property, general liability, and a business interruption policy she’d added after a pipe burst in 2021 — ran $1,100 a month, nearly double what she’d paid before the pandemic. Her two part-time employees had cost her $8,200 for the month, including payroll taxes. Cost of goods sold: $23,500. By the time she got through utilities, credit card processing fees, website maintenance, and the accountant’s monthly retainer, she had $3,100 left. From $42,000 in revenue. A margin of seven and a half percent. And that was a good month.

“People look at my store and think I’m doing ﬁne,” Darlene said. “And in some ways I am — I’m here, I’m open, I love what I do. But there’s no buffer. There’s nothing left over. If February had been $38,000 instead of $42,000, I’d have had to put something on a credit card. And I’ve been doing this for eleven years. I know what I’m doing. I’m not making mistakes. The math just doesn’t add up anymore.”

The cost squeeze facing independent retailers is not the result of any single force but of several structural pressures compounding one another simultaneously — a perfect storm of rising expenses in a category where revenue growth is difficult to achieve and price increases are constrained by the relentless downward pressure of online competition. Understanding the anatomy of that squeeze requires examining each cost element in turn.

Commercial real estate is the ﬁrst and often most decisive factor. In desirable markets — urban neighborhoods, renovated downtown corridors, tourist- adjacent small towns — commercial rent has risen dramatically in the post-pandemic period, driven by strong demand from restaurateurs, health and wellness businesses, and services providers who are willing to pay premium rates for foot-traffic-friendly locations. Independent retailers who occupy these spaces have found themselves priced out as leases renew. In declining markets — rural downtowns, economically depressed small towns — the problem manifests differently: while rents may be low, the customer base is also thin and shrinking, buildings are often in poor physical condition, and landlords who are themselves economically stressed may not invest in maintenance. Darlene Hooper’s rent increase in Oceola did not reﬂect a booming market. It reﬂected a landlord’s own cost pressures being passed directly to his most stable tenant. She had no negotiating power. She needed that particular storefront, in that particular location, for reasons of identity and community relationship that could not simply be swapped for a cheaper space in an industrial park on the edge of town.

The insurance crisis deserves extended attention, because it has worsened dramatically in recent years with very little public discussion. U.S. commercial insurance rates increased by 6.6 percent in the fourth quarter of 2023 alone, according to Willis Towers Watson’s Commercial Lines Insurance Pricing Survey — and that was on top of years of consecutive increases.

Commercial property insurance, in particular, has seen double-digit rate increases in many markets, driven by increased claims frequency, catastrophic weather events, and insurers’ own portfolio-rebalancing in response to reinsurance costs. For a small retailer occupying a building in the Mississippi Delta or along the Gulf Coast, property insurance premiums that were once a manageable line item have become a genuinely threatening expense. Some independent retailers have watched their insurance costs double or triple over ﬁve years. Large chains absorb these increases across thousands of locations and millions of square feet of insured property, spreading the risk so broadly that the per-location impact is minimal. Darlene Hooper absorbs it alone.

Labor costs have also shifted profoundly. The national conversation about minimum wage increases — necessary and overdue from a worker welfare perspective — has had real consequences for labor- intensive small retailers who cannot easily substitute technology for human customer interaction. An independent gift shop or apparel boutique is, by its nature, a high-touch operation: customer service, visual merchandising, product knowledge, and relationship management are its primary competitive advantages. These are human activities. When the labor cost of those human activities rises — as it should, in a society that values the dignity of work — the retailer must either raise prices (risking competitive disadvantage), reduce staff (risking service quality), or absorb the cost (compressing margins further). Large chains have more options: they can invest in point-of-sale automation, restructure staffing models, or negotiate wage tiers across regions in ways that small operators simply cannot.

The cost of goods themselves has added another layer of pressure. Supply chain disruptions beginning in 2020 — container shipping bottlenecks, port delays, raw material shortages — drove wholesale prices higher across virtually every retail category. Inﬂation in ﬁnished goods ran at multi-decade highs through 2022 and 2023. Independent retailers, purchasing in small volumes without the leverage to negotiate favorable terms or lock in long-term pricing with suppliers, absorbed these increases more fully than large chains. At the same time, the price sensitivity of their customers — shaped by years of Amazon’s low-price conditioning — made it extremely difficult to pass those cost increases through to consumers in the form of higher retail prices. The margin got compressed from both ends at once.

What makes all of this so devastating, and so unjust, is that it falls entirely on the individual operator. Walmart has a ﬁnance department that models insurance cost scenarios across its entire store ﬂeet. Home Depot has a real estate team that negotiates lease terms with institutional landlords from a position of enormous power. Amazon has no stores, no rent, and no property insurance in the traditional sense — its logistics costs are distributed across an operation of such scale that they represent fractions of pennies per transaction. The independent retailer sits at the kitchen table on Tuesday evenings, spreading papers under a ﬂuorescent light, running the subtraction one more time, and hoping this month’s math works out differently than last month’s. It usually doesn’t. And when it ﬁnally doesn’t work out at all — when the gap between what comes in and what goes out crosses a threshold that cannot be bridged — the door gets locked, and the storefront goes dark, and another gap appears in the main street’s smile.

• * *

Chapter Five – The Digital Divide

Why most independent retailers are losing the online battle

Connie Breazeale had a notebook. She kept it behind the register at Connie’s Country Cottage — a gift and home décor shop she’d built over twenty-two years in Fairhope, Alabama — and in it, in her precise schoolteacher’s cursive, she had written down everything her nephew Marcus had taught her about the internet. There were notes about Instagram hashtags and posting schedules and something called “the algorithm” that Marcus had explained three different times and that Connie still did not fully understand.

There were instructions for logging into her Squarespace account, her Google Business proﬁle, and the Facebook page for the store, each with its password written down in a different colored ink. There were notes from a workshop she’d driven to Mobile to attend, hosted by the Small Business Development Center, on something called “search engine optimization,” which had been useful but had also, frankly, left her feeling like she’d been asked to learn a second language in an afternoon.

None of this was easy. Connie was sixty-one years old, an extraordinarily competent businessperson who had kept a retail operation alive through the 2008 recession, through two hurricanes, through the upheaval of the pandemic. She knew her inventory, her customers, her suppliers, and her margins with the precision of someone who had been paying attention for two decades. But the digital world operated on different rules, moved at a different pace, and rewarded a different kind of expertise — expertise that took years to develop, that required constant updating as platforms changed their systems, and that was, in its fundamentals, a second full-time job. Connie already had a full-time job. She had one that required her physical presence for six days a week.

“I post on Instagram,” she said one afternoon, “when I remember to, which is not always. I try to respond to Google reviews. I have the website but I don’t know if it works — by which I mean, I don’t know if people ﬁnd it. My nephew says I need to do something called an SEO audit. I asked him what that costs. He said between $500 and $2,000. I said I’d think about it.”

She had not yet done the audit. The store, for all its warmth and beauty and twenty -two years of community loyalty, had no e-commerce capability, no loyalty program, no email list, no analytics beyond the monthly sales ﬁgures in her point-of-sale system. In the hierarchy of modern retail capability, she was operating in a dimension that large competitors had left behind entirely.

The digital capability gap between independent retailers and their large competitors is one of the most consequential and least-discussed dimensions of the crisis facing Main Street. It is not a gap of intelligence or effort — Connie Breazeale is, by any reasonable measure, a more intelligent and harder-working businessperson than many corporate retail managers. It is a gap of resources, time, expertise, and scale — and it is widening every year as the digital competitive landscape grows more complex and more expensive to navigate.

Consider the basic infrastructure of modern digital retail. A competitive e-commerce presence requires: a well-designed, mobile -optimized website built on a platform like Shopify; product photography that meets contemporary consumer visual expectations; a curated selection of online inventory with detailed, keyword-rich product descriptions; a system for managing online orders, shipping, and returns; active and consistent social media presence across at least Instagram, Facebook, and increasingly TikTok; a strategy for managing and generating Google reviews; a Google Business proﬁle kept current with accurate hours, photos, and responses to customer questions; paid digital advertising across Google Shopping and Meta platforms; an email marketing system with a subscriber list, regular campaigns, and automated ﬂows for abandoned carts and post -purchase follow -up; and, for retailers with physical locations, a local SEO strategy designed to ensure they appear in Google’s “near me” search results. Each of these elements requires expertise. Each requires time. Each requires money. And each requires regular updating as the platforms change their systems — which they do, frequently, often without much notice.

The cost of this infrastructure, even on its most modest version, is not trivial for a small retailer. Shopify’s basic plan runs approximately $39 a month, but a properly conﬁgured Shopify store with a professional theme, custom domain, and integrated apps for inventory management, email marketing, and customer reviews might cost $150 to $300 a month before any advertising. A professionally managed Facebook and Instagram advertising campaign runs $500 to $1,500 a month at a minimum scale. Search engine optimization, done properly by a professional, costs $1,000 to $2,000 a month. Google Shopping ads require both a product feed and a bidding strategy that, without expertise, can burn budget rapidly with minimal return. And none of these investments are guaranteed to produce results quickly; digital marketing has a learning curve, an experimental character, and a timeline for return on investment that can extend to many months.

Against this, consider the digital infrastructure available to Walmart, Target, or Amazon. These companies employ thousands of digital marketing professionals, data scientists, UX designers, and technology engineers dedicated full-time to their online presence. They conduct A/B tests on thousands of variables simultaneously. They have proprietary customer data spanning hundreds of millions of transactions, enabling personalization algorithms that independent retailers cannot approach. Their email lists number in the tens of millions. Their social media followings are so large that algorithmic suppression — the phenomenon by which social media platforms reduce organic reach for business accounts in order to encourage paid advertising — affects them far less proportionally than it affects a small retailer with three thousand followers trying to reach two thousand of them with a post about a new product line.

The pay-to -play nature of social media algorithms deserves particular emphasis. In the early years of Facebook and Instagram for business, organic reach — the ability to put content in front of your followers without paying for it — was substantial. A small retailer who built a loyal social media community could reliably reach most of those followers with posts about new arrivals, sales events, or behind-the -scenes content. That era is over. Facebook’s own data has shown that average organic reach for business pages has fallen to between two and ﬁve percent of a page’s follower count. A gift shop with 3,000 followers can expect its unpaid posts to reach 60 to 150 people. To reach more, it must pay. And the platforms’ advertising systems, while powerful, are complex enough that small operators often waste signiﬁcant money before learning to use them effectively — if they ever do.

Google’s local search changes have added another dimension of difficulty. Google’s “Local Pack” — the map -based display of businesses that appears at the top of local search results — is enormously inﬂuential for independent retailers who depend on foot traffic. A gift shop that appears in the Local Pack for searches like “gift shops in Des Moines, Iowa” receives a powerful competitive advantage. One that does not appear is effectively invisible to a signiﬁcant portion of potential customers. Securing and maintaining that placement requires consistent attention to the Google Business proﬁle, a steady stream of customer reviews (which must be actively solicited), and a website structured in ways that signal local relevance to Google’s algorithm. None of this is rocket science, but all of it takes time and knowledge that many independent retailers lack.

The skills gap is generational in its most acute form, but it would be a mistake to reduce it entirely to age. Younger independent retailer owners face their own digital challenges: the cost of effective digital marketing is high regardless of one’s technical comfort, and the time required to execute it well competes directly with the time required to run the actual store. A thirty-ﬁve – year-old boutique owner who is ﬂuent with Instagram may still lack the resources to hire a professional photographer, run paid campaigns effectively, build an SEO strategy, and maintain an e-commerce operation — all while opening at nine, closing at six, managing inventory, handling customer service, doing the bookkeeping, and taking one day off a week if she’s lucky.

Connie Breazeale eventually got help. Her nephew Marcus, who worked in digital marketing in Mobile, agreed to spend a few Saturdays building her a proper website, setting up an email list, and teaching her a posting schedule that felt manageable. The store is still open. Whether that help — volunteer labor from a skilled family member — should be a prerequisite for survival in independent retail is a question worth sitting with.

Most independent retailers don’t have a Marcus. And the digital divide will not be closed by goodwill and family connection alone.

• * *

Chapter Six – The Regulatory Labyrinth

How government policy piles on — often with the best of intentions. An entire book could be written on this subject alone.

Thomas Peck had run Peck’s Outdoor Supply and Sporting Goods out of the same Monroe, Louisiana storefront for sixteen years when the letter arrived from the state revenue department. It was not, in its particulars, a frightening letter — no accusation, no penalty notice, no audit demand. It was informational. It explained that under new economic nexus rules, effective immediately, out-of-state customers who had purchased from Peck’s through his small online store — a modest Shopify operation he’d set up during the pandemic to supplement his walk-in business — might trigger sales tax collection obligations in their home states if his total online sales to those states exceeded certain thresholds.

The letter provided a chart. The chart listed forty-ﬁve states with sales tax, their respective thresholds, their effective dates, and their contact information for registration. Some thresholds were $100,000 in sales. Some were 200 transactions. Several were both. A few were different from the others in ways that seemed, to Thomas, almost deliberately confusing.

Thomas Peck is not a lawyer. He is a man who sells hunting licenses, ﬁshing tackle, camouﬂage clothing, tree stands, and duck calls. He is very good at it. He has never had an employee work for him who did not, within a year, know more about waterfowl decoys than most people learn in a lifetime. He is the kind of retailer who keeps a community’s outdoor tradition alive, who knows which local farm pond the bass are hitting in, who orders special items for regular customers without being asked twice. None of these skills equipped him to navigate a multi-state sales tax compliance matrix. He called his accountant. His accountant said it would take her some time to ﬁgure out the new requirements and that her time, she was sorry to say, was not free. The compliance software she recommended — a system called Avalara — ran several thousand dollars a year. For a retailer doing perhaps $40,000 in annual online sales, that was not a small number.

“I ended up just shutting down the online store,” Thomas said. “It wasn’t worth the headache. And that’s the thing — I never wanted to be a big internet seller. I just wanted a little extra business during slow season. But the paperwork turned it into something I couldn’t manage without paying someone more than I was making from it.”

The Supreme Court’s 2018 ruling in South Dakota v. Wayfair, Inc. was a legitimate and arguably necessary correction to a sales tax system that had, in the internet era, created a serious competitive inequity. Under the old physical-presence rule, online retailers with no physical presence in a state — including Amazon, at various points in its history — were exempt from collecting that state’s sales tax, giving them a built -in price advantage over brick-and-mortar retailers who were required to collect. Wayfair eliminated that exemption, requiring remote sellers who exceed certain sales thresholds in a state to collect and remit that state’s sales tax regardless of physical presence. In principle, this was good policy — a leveling of the playing ﬁeld. In practice, it created a compliance burden that fell with devastating asymmetry on small businesses.

By January 2023, every state with a sales tax had enacted economic nexus rules, creating registration, collection, and remittance obligations in jurisdictions where a small business may have sold nothing more than a few hundred items.

The thresholds vary by state. The deﬁnitions of what constitutes a taxable transaction vary by state. The ﬁling frequencies vary by state. The audit protocols vary by state. A small retailer selling online to customers in multiple states must either hire a compliance professional or purchase compliance software to navigate this landscape — costs that represent a trivial expense for a large operation with a dedicated tax department and a potentially prohibitive one for a small operator already working on thin margins. States reportedly collected $23.3 billion from remote sellers in 2021 alone, a windfall whose compliance costs were disproportionately borne by the smallest market participants.

Wayfair is perhaps the clearest example of a broader pattern: regulations conceived with legitimate and reasonable intentions that generate compliance costs structured in ways that harm small businesses far more than large ones.

Large retailers employ full compliance departments — teams of lawyers, accountants, and tax professionals whose sole function is to ensure that the company meets its obligations across all the jurisdictions in which it operates.

One convenience store operator once told me, “I ceased being a retailer when I became a tax collection agenc y for the government.” A small retailer employs one person, and that person is usually also the buyer, the marketer, the customer service department, and the window display designer. Regulatory compliance does not scale like marketing costs or supply chain costs — it is, in many cases, a ﬁxed cost of doing business that hits small operators at a fundamentally different level than large ones.

The regulatory burden on independent retailers extends well beyond sales tax. Consider the Americans with Disabilities Act, which requires commercial facilities to meet accessibility standards — ramps, accessible restrooms, proper door widths, hearing loop systems — that can cost tens of thousands of dollars to retroﬁt into older commercial buildings.

The ADA is good law. Accessibility is a civil right. But a small retailer operating in a nineteenth- century downtown building — the kind of building that gives a Main Street its character, its history, and its appeal — may face retroﬁt costs that are simply beyond reach without grant funding or signiﬁcant ﬁnancing.

A national chain building a new store from scratch designs to ADA speciﬁcations automatically; it is a line item in the architect’s drawings.

The independent retailer in the old Merchants Building faces a capital project she cannot afford, a compliance requirement she cannot ignore, and a regulatory agency that, in fairness, is not in the business of making exceptions.

Occupational licensing requirements have proliferated across many retail-adjacent categories. Food retail — including specialty food shops, convenience stores, gourmet grocery, confectioneries, and farm-to -table operations — involves a complex web of state and local food handling permits, commercial kitchen certiﬁcations, cottage food exemptions with their own limitations, and health department inspection regimes that vary signiﬁcantly by jurisdiction.

Zoning restrictions frequently complicate mixed-use retail operations, preventing a gift shop from hosting paid events in its space or a hardware store from operating a tool-rental service without additional permitting.

Employment law compliance — FMLA notices, OSHA documentation, I-9 records, state-speciﬁc poster requirements — adds another layer of administrative work that, for a chain with an HR department, is handled routinely, and for a sole proprietor, is handled when she can get to it, which is often not as promptly as the law technically requires.

None of this is an argument for deregulation as such. The protections embedded in these regulations — worker safety, consumer protection, accessibility, tax equity — are real and valuable. The argument is a narrower and more targeted one: regulatory design should account for the differential burden that compliance imposes on businesses of different scales.

Small business impact statements — formal analyses of how proposed regulations will affect independent operators relative to large corporations — are rarely conducted with rigor or real consequence. The result is a regulatory environment that is, in aggregate, far more burdensome for the independent retailer than for any of its large competitors, not because anyone designed it that way, but because no one designed it otherwise.

Thomas Peck did not shut down his online store because government is malicious. He shut it down because nobody thought to make the rules manageable for someone selling duck calls and ﬁshing tackle from a single storefront in Monroe, Louisiana.

• * *

Chapter Seven – The Financing Gap

When banks stop lending to Main Street

In the spring of 2021, James Whitﬁeld walked into his bank in Memphis, Tennessee with a folder as thick as a hardback novel. Inside were ﬁfteen years of tax returns, proﬁt and loss statements, balance sheets, inventory valuations, a current credit report with a score of 718, two letters of reference from suppliers, and a business plan for a $75,000 working capital loan he needed to fund a major inventory expansion before the holiday season.

James owned Whitﬁeld’s Clothier — a men’s dress clothing shop that had dressed Memphis area lawyers, doctors, preachers, and politicians for three generations — and the business was doing well, all things considered. Revenue had grown eighteen percent over the pre-pandemic baseline. He had no outstanding debt. His landlord had given him a ﬁve-year lease. He was not a bad credit risk. He was, by most rational measures, precisely the kind of small business a bank should want to lend to.

The bank said no. Not immediately and not rudely, but no. The loan officer, who James had known for years and who seemed genuinely apologetic, explained that the bank’s small business lending guidelines had been updated and that retail — as a sector — had been internally classiﬁed as elevated risk. He suggested James try the SBA.

James tried the SBA. The process took four months, required documentation that James found, in some cases, almost impossible to produce in the forms requested, and ultimately resulted in an offer for a loan at a rate that, after fees, worked out to about eleven percent annually. James had been hoping for something closer to six.

He declined, went back to his regular supplier relationships, negotiated thirty-day extended payment terms on about half of his holiday inventory, and made it through the season, but only barely. “There is no one who will lend me a reasonable amount of money at a reasonable rate for a reasonable term,” he said later. “A business with my track record should not have that problem. But I have that problem.”

The retreat of traditional bank lending from small independent retail is one of the most consequential and least-discussed ﬁnancial stories of the past two decades. It has roots in the regulatory reforms that followed the 2008 ﬁnancial crisis, speciﬁcally the Dodd- Frank Wall Street Reform and Consumer Protection Act, which — in response to legitimate problems in the banking system — imposed capital requirements, stress testing, and compliance costs that made small business lending less attractive to banks of all sizes. Small business loans are inherently more expensive to underwrite than large commercial loans, because each one requires individual analysis of a unique business with a unique risk proﬁle, while large loans can be analyzed more systematically and at greater scale.

Post-Dodd -Frank, with banks under pressure to meet capital ratios and reduce risk exposure, the math of small business lending became less favorable, and many banks — including community banks that had historically been small business lending’s backbone — quietly reduced their small business retail portfolios.

The Federal Reserve Bank of St. Louis noted in 2023 that community banks, despite their traditional strength in small business lending, face genuine structural challenges in doing so: higher risk of business failure among small borrowers, difficulty assessing creditworthiness without robust ﬁnancial histories, and the relatively high cost per dollar of processing small loans. These challenges are real. They are also, from the perspective of James Whitﬁeld, not his fault and not his problem to solve — but his problem to live with.

Into the vacuum left by traditional bank lending stepped a category of ﬁnancial products that, for many independent retailers, has made a bad situation catastrophically worse: merchant cash advances. A merchant cash advance is not technically a loan — it is a purchase of future receivables, a distinction that has signiﬁcant legal implications. A lender advances a sum of money to a business in exchange for a ﬁxed percentage of the business’s future daily credit card receipts, plus fees, until the advance and fees are repaid. The fees charged on these products frequently translate to annual percentage rates of 40, 60, 80, or even more than 100 percent. An independent retailer who takes a $50,000 merchant cash advance to get through a slow season may ﬁnd herself repaying $70,000 or more within a year, with daily automated withdrawals from her business checking account that can severely constrain cash ﬂow precisely during the period when cash ﬂow is most needed.

The merchant cash advance industry targets small retailers aggressively — through direct mail, cold calls, and online advertising that emphasizes speed and accessibility (“approved in 24 hours,” “no collateral required,” “bad credit OK”) while minimizing or obscuring the effective cost of capital. For a retailer in a genuine cash crunch — a broken HVAC in August, a slow January, an insurance claim that took three months to pay — the appeal is understandable. The consequences can be devastating. Some retailers enter cycles of advance-and- repay that are functionally impossible to escape, taking new advances to pay off old ones, steadily transferring a greater and greater share of their revenue to lenders until the business itself becomes unsustainable.

The SBA loan program, for all its limitations, represents the most accessible conventional ﬁnancing option for many independent retailers. But the SBA process is slow — the standard 7(a) loan can take sixty to ninety days to close, making it useless for time-sensitive working capital needs — and complex, with documentation requirements that can be genuinely difficult for small operators to meet.

SBA loans used to acquire existing businesses — the tool most commonly available for succession transactions, which we will examine in the next chapter — require appraisals of goodwill and intangible assets that the banking system handles poorly, often resulting in loan amounts insufficient to ﬁnance a realistic business acquisition.

The ﬁnancing gap falls with particular severity on minority-owned independent retailers. A substantial body of research has documented persistent disparities in small business lending by race: Black-owned businesses are rejected for loans at signiﬁcantly higher rates than comparable white-owned businesses, receive lower loan amounts when approved, and are charged higher interest rates.

The Small Business Credit Survey conducted by the Federal Reserve found that Black business owners were more likely to report experiencing ﬁnancing gaps and less likely to receive the full amount of ﬁnancing they applied for. In a retail landscape where access to working capital is already a critical competitive disadvantage for independent operators of all backgrounds, the additional barrier imposed by racial bias in lending represents a compounding injustice — one that concentrates the retail extinction event most heavily in the communities that can least afford it.

James Whitﬁeld still has his store. He is still dressing Southwest Tennessee. He ﬁgures he has another good ten years in him, and he intends to use them. But the question of who will lend him money — at a price he can afford, in a timeframe that actually helps — remains unresolved. It is a question that policy could answer, if policy chose to. So far, it has not chosen to.

• * *

Chapter Eight – The Succession Crisis

Who will take over Main Street?

Betty Jean Holloway built something remarkable. That is not the author’s assessment — it is the assessment of virtually everyone in Collins, Mississippi who has ever walked through the door of Holloway’s Sewing Center and Fabric Boutique, which Betty Jean opened in 1986 in a narrow storefront off the square with ﬁve thousand dollars, a commercial sewing machine, and a conviction that the women of Covington County deserved access to quality fabric at honest prices.

Over thirty-seven years, she expanded twice, built relationships with suppliers in New York and North Carolina, trained dozens of young women in quilting, garment construction, and embroidery, won the Chamber of Commerce’s Small Business of the Year award four times, and quietly became the kind of institution that a town can only really understand it has when it is threatened with losing it.

By 2023, Betty Jean was sixty-nine years old and her knees had started giving her trouble. She had no children interested in the business — her son was an engineer in Houston, her daughter a nurse practitioner in Mobile — and no employee who had the capital, the credit history, or the business formation knowledge to buy the store from her.

She listed the business with a local broker who told her, gently, that businesses in her category — specialty retail with signiﬁcant goodwill embedded in personal relationships — were difficult to sell. Buyers were few, ﬁnancing was complicated, and the store’s value was, in a meaningful sense, inseparable from Betty Jean herself. She tried for two years. She had three inquiries, two serious conversations, and zero closings. In the spring of 2024, she locked the door, donated the remaining fabric inventory to a church quilting circle, and sold the sewing machines at auction. Holloway’s Sewing Center and Fabric Boutique — thirty-eight years of craft, community, and accumulated knowledge — was absorbed into the past.

Betty Jean Holloway is, by the arithmetic of American demography, neither an anomaly nor an outlier. She is the leading edge of a wave. According to the Exit Planning Institute’s 2023 National State of Owner Readiness Survey, 51 percent of the current American business market is owned by Baby Boomers who are set to transition ownership over the next decade. An estimated 73 percent of privately held companies plan to transition ownership within ten years, representing a total business value of approximately $14 trillion.

Nearly half of all surveyed business owners plan to exit within ﬁve years. And here is the number that should keep everyone who cares about Main Street awake at night: only 20 to 30 percent of businesses that go to market actually sell. The rest — up to 80 percent — close, liquidate, or simply disappear.

For independent retailers speciﬁcally, the succession math is even grimmer than for small businesses generally. Retail businesses are among the least attractive acquisition targets for several structural reasons. They are capital-intensive relative to their earnings — a buyer must typically pay for not just the goodwill of the business but its inventory, equipment, lease obligations, and often leasehold improvements, all of which require signiﬁcant upfront investment. Their value is highly dependent on the current owner’s relationships, expertise, and reputation, which are difficult to transfer and difficult to quantify in a way that satisﬁes a bank’s underwriting standards. And they operate in a sector that any rational analyst would identify as structurally challenged — a fact that makes it harder to make a compelling acquisition case to an SBA lender or a conventional banker.

The business brokerage ecosystem is not well conﬁgured for Main Street retail. The vast majority of business brokers focus on transactions above a certain size — typically $500,000 or more in revenue, often much higher — because their commission structures require meaningful transaction values to justify the time investment. A sewing center in Collins, Mississippi with $250,000 in annual revenue and $30,000 in owner earnings simply does not generate enough commission for a professional broker to devote serious effort to selling it. The owner is largely on her own, navigating a market with imperfect information, limited buyer pools, and a ﬁnancing environment that does not make small retail acquisition easy.

The cultural dimension of the succession crisis is at least as important as the structural one. The generation that built Main Street retail in America — the Boomers and older Gen Xers who opened their stores in the 1970s, 1980s, and 1990s — often did so with a particular aspiration: to be independent, to be their own boss, to build something that was theirs. That aspiration was culturally celebrated and structurally supported in ways that it simply is not for younger generations today.

Millennials and Gen Z coming of age in the current retail environment see a sector characterized by intense competition, thin margins, regulatory complexity, and existential threat from e- commerce. The romance of retail ownership — the idea of the shopkeeper as a pillar of the community, a ﬁgure of economic independence and civic signiﬁcance — has been substantially eroded by decades of exactly the forces this book has been documenting. Young people who might, in another era, have bought a hardware store or a gift shop are instead pursuing careers in tech, health care, or the knowledge economy — sectors that offer better compensation, more stable hours, and a less harrowing competitive environment.

There are alternative succession models that deserve serious attention. Employee Stock Ownership Plans — ESOPs — allow business owners to sell a controlling interest in their company to a trust held by its employees, providing the owner with a liquidity event while preserving the business as an operating entity and the employees as beneﬁciaries of its future success.

ESOPs have been used successfully in manufacturing, professional services, and some retail contexts. They are complex, expensive to establish, and not well understood by most small business owners or their advisors — but where they have been deployed in retail settings, the results have sometimes been remarkable.

Worker cooperatives — an even more decentralized model of employee ownership — have found traction in some grocery and food retail contexts and deserve broader consideration as succession vehicles for independent retailers.

Community ownership models are also emerging: small groups of community investors who purchase a local business to preserve its presence in the community, not primarily as a proﬁt investment but as a civic investment. These models have worked in rural grocery stores, local newspapers, and some specialty retail contexts. They require patient capital, realistic return expectations, and community organizing capacity that not every town possesses — but they represent a genuinely promising avenue in places where the alternative is closure.

What we lose when a place like Holloway’s Sewing Center closes is not simply a retailer. We lose an institution. We lose thirty-eight years of accumulated expertise — knowledge of fabric, of garment construction, of the particular tastes of a particular community — that has nowhere to go when the door is locked. We lose a gathering place for a community of craft. We lose tax revenue, employment, and the modest but real economic multiplier of a locally owned business. And we lose another node in the network of social connection that independent retailers, almost uniquely among business types, have the capacity to maintain. Every closure makes the next one easier and the next one after that a foregone conclusion. The succession crisis is not just a business problem. It is a community problem. And it is coming faster than most communities are prepared to admit.

• * *

Chapter Nine – The Survivors

What independent retailers who are thriving have in common

On the ﬁrst Saturday of every month, the parking lot behind Ace Hardware of Odessa, Texas ﬁlls up with people who are not there to buy hardware. Or rather, they are there to buy hardware — eventually — but they are there, ﬁrst and most urgently, to learn. The store, owned by Frank and Dee Tillman since 2007, runs weekend workshops in the backroom: basic plumbing repair, tile installation, cabinet painting, screen door replacement, introduction to woodworking, winterization for homeowners.

The workshops cost between ﬁfteen and forty dollars, depending on length and materials. They sell out, usually within days of being announced on the store’s Facebook page and email list. And they bring into the store, every single month, a new cohort of people who need the tools and supplies to do the things they just learned — and who now associate Ace of Odessa not with a purchase but with an experience, not with a transaction but with the conﬁdent, unhurried feeling of having learned something useful from someone who genuinely knows it.

Frank Tillman did not arrive at this model through a Harvard Business School curriculum. He arrived at it by watching what his store was good at and what Amazon could not do. “Amazon can ship a pipe wrench to your house faster than I can walk it to the register,” he said one morning, standing in the back room arranging folding chairs for a tile workshop. “I’m not going to win that race. But Amazon cannot stand next to someone in their bathroom and show them how to replace a wax ring on a toilet. That’s what I can do. That’s what my staff can do. So that’s the business I decided to be in.”

The Tillmans’ store is proﬁtable. It has grown its revenue for six consecutive years. It has a waiting list for some workshops. It has, by design, a customer base that is loyal not because it is the cheapest option or the most convenient option but because it is the most useful option — the place where your question gets answered by someone who has ﬁxed that particular problem in homes just like yours, in a town that looks just like this one.

The Tillmans did not survive by competing with Amazon. They survived by refusing to compete with Amazon on Amazon’s terms, and instead competing on a terrain where Amazon has no capability whatsoever.

The survivors of independent retail — and there are survivors, in every corner of America, in every category of commerce — share a set of characteristics that are more analytical than inspirational, more structural than anecdotal. They are not simply “passion projects” or stores run by extraordinarily charismatic personalities, though personality helps. They have made speciﬁc strategic choices that insulate them, partially at least, from the forces that have devastated their peers. Understanding those choices is the work of this chapter.

The ﬁrst and most fundamental characteristic of surviving independent retailers is radical curation.

Where big box stores and Amazon compete on breadth — the promise of everything, available immediately — the strongest independent retailers compete on depth, editing their selections down to a precisely deﬁned universe of products about which they have genuine, demonstrable expertise. A surviving independent bookstore does not try to stock everything Barnes & Noble carries. It stocks what its booksellers have read, loved, and can recommend with personal authority. A surviving specialty food shop does not try to be a small version of a supermarket. It carries a carefully curated selection of exceptional products — local, artisanal, hard-to -ﬁnd — that justify a premium and that cannot be easily replicated by a category-leading online competitor. This curation is not minimalism for its own sake. It is a deliberate competitive strategy: the independent retailer becomes the authoritative expert on a deﬁned category rather than a mediocre generalist in a broad one.

The second characteristic is an experiential orientation — a deliberate investment in making the store itself a destination worth visiting, independent of any speciﬁc purchase intention. This can take many forms: workshops and classes, as the Tillmans have done; in- store events, tastings, demonstrations, or performances; community programming that uses the retail space as a civic amenity; distinctive visual environments that reward the act of being there. The experiential dimension of retail has become, in the age of e- commerce, one of the few remaining structural advantages available to a physical store. Online shopping is frictionless, cheap, and fast. It is also solitary, sensory-poor, and entirely transactional. The surviving independent retailer transforms shopping into an experience that has social and sensory value beyond its commercial content — and in doing so, creates a reason to visit that Amazon’s checkout screen cannot match.

Third, and intimately connected to the experiential orientation, is deep community integration. The independent retailers who are thriving are not businesses that happen to be located in communities. They are institutions of those communities — places that sponsor the Little League team, that donate auction items for the school fundraiser, that feature local artists on their walls, that hire locally, that buy locally where they can, that show up at city council meetings and chamber of commerce events and ne ighborhood association gatherings. This integration is not purely altruistic — it is also good business. A retailer that is understood as a community institution by the people of that community has a loyalty advantage that no loyalty points program can replicate. Customers who feel that their shopping is a civic act — that it supports something they value beyond the product itself — are more forgiving of price differentials, more resistant to competitive poaching, and more likely to become active advocates who recommend the store to others.

Fourth, the survivors have typically found a niche in which Amazon structurally cannot compete effectively. These niches are real and numerous. Any product category in which expert guidance is integral to the purchase decision — specialty sporting goods, musical instruments, high- end art supplies, specialty foods, rare plants — is a category in which an engaged, expert human being adds value that an algorithm cannot replicate.

Any product category in which local sourcing is itself the differentiator — farm -to -table food, locally made craft goods, regional books and gifts — creates a selection that Amazon, by deﬁnition, cannot carry. Any category in which the experience of trying, ﬁtting, or testing the product is essential — running shoes ﬁtted by a trained shoe ﬁtter, ﬁrearms properly sized and balanced, eyewear selected with aesthetic counsel — creates a transaction in which the physical store’s presence is not merely conv enient but necessary.

Fifth, the survivors have typically built loyalty ecosystems based on relationship rather than transaction. This does not necessarily mean formal loyalty programs, though some do use them. It means investing systematically in knowing their customers — maintaining email lists and using them well, following up on purchases, acknowledging anniversaries and milestones, making people feel seen and remembered in ways that a corporation, with its transactional anonymity, cannot. The independent retailer’s data advantage — the ability to know a customer’s name, their preferences, their household, their habits — is not a technology advantage. It is a human advantage. The survivors have understood this and have made its cultivation a deliberate business practice.

Finally, and perhaps most importantly, the survivors have been honest with themselves about what they cannot win and what they can. They have stopped spending energy trying to match Amazon’s price or Walmart’s selection or Target’s convenience. Instead, they have gone deeper — into expertise, into relationship, into experience, into community — and found that there is a customer, in every community, for every category, who will pay a reasonable premium for the thing that only an independent retailer can provide.

The challenge is making sure those customers know the store exists. The challenge is making sure the store survives long enough to ﬁnd them. But they are there. In Boise, in H attiesburg, in Odessa, in Natchez and Memphis and Little Rock and Ocala. They are there, and they are waiting for someone to give them a reason to come in.

• * *

Chapter Ten – Some of my best friends have been jobbers

The nervous young man who drove ﬁfty miles, the minicomputers in the basement, and the conversation I never got out of my head

My infatuation with convenience stores started in 1978, when I was only thirty-ﬁve years old. It began with a nervous young man, straight out of college, who had just driven ﬁfty miles to my office to ﬁnd his savior.

For the record, I wasn’t it. But ironically, he turned out to be mine.

Let me explain. At that point in my life, I had built thirteen micro computers in my basement and sold them about as fast as I could build them. The problem was that I had barely made enough money to pay the light bill.

I had been a salesman most of my life and had zero working knowledge of how the retail industry functioned — except to say, in the broadest possible terms, that some people made their living by selling things to the general public and money somehow showed up in their bank accounts so they could pay their bills. That was the extent of my expertise regarding retail.

I’ll call my visitor Bobby, because for the life of me I cannot remember his real name.

Bobby had just graduated from Colorado State University with a degree in Business, and his father — a gasoline and diesel wholesaler in Denver, Colorado — had extracted a promise from him: when the old man retired, Bobby would take over the family business. Bobby’s father was what the industry called a “jobber.” In those days, gasoline and diesel wholesalers didn’t normally sell to the general public. They were middlemen of a particular kind — companies that purchased fuel from Exxon, Texaco, Phillips 66, and other reﬁners at cost, and then resold fuel, oil, grease, batteries, tires, and automotive accessories to farmers, retailers, and other local businesses at a proﬁt. The reﬁner sold to the jobber. The jobber sold to the world.

Bobby’s father was that jobber.

And Bobby’s assigned mission, as the heir apparent to the enterprise, was to start a chain of convenience stores — outlets through which the company could sell gasoline and diesel directly to the general public, cutting out the middlemen and keeping all of the margin that had previously been surrendered to them. It was a sound idea in principle. In practice, it was anything but simple.

The complications were formidable. Sourcing and managing the merchandise inside the store was one challenge. The tax complications I described earlier in this book were another matter entirely — so complex, so layered with state and federal requirements, that managing them properly required hiring a dedicated employee for that purpose alone. Bobby had arrived at my office with a sharp mind, a brand-new degree, and a clear mandate from his father, but the full weight of what he was being asked to build was sitting on his shoulders like a stone.

I could not help him the way he was hoping. But I could not get the conversation out of my head after he left.

What Bobby had described — the jobber trying to become a retailer, the convenience store as a fuel distribution vehicle, the structural complexity of doing both at once — was a problem I found genuinely fascinating. I started writing. The result was a roadmap, that laid out a framework for how a fuel and oil jobber might approach the transition into retail.

I’m not suggesting that it wasn’t already being done. 7 – Eleven was the business that everyone looked up to, but 7 -Eleven purchased their fuel from jobbers like Bobby’s dad and extracted vas t concessi ons out of jobbers who beneﬁted from the increased volume … an entirely different business model.

My writings found its way to a college professor in Louisiana who had written a computer program designed speciﬁcally for fuel and oil jobbers. He read it, tracked me down, and hired me to run his sales organization. At that point, his sales organization consisted entirely of one person: me.

The year was 1980. I spent the entire year learning the fuel and oil jobber business from the inside — how it was structured, how it worked, where it was headed, and where it was vulnerable. It was an education I could not have gotten any other way.

In one years’ time, during the course of me visiting jobbers throughout the South east and Texas, I sold eight comp lete systems at an average selling price of $80,000 each and a list of 60 who said they would a system at half the price, around $35,000 including the computer and the software that ran on it. The problem was the professor’s software only ran on a $65,000 computer which included $0 proﬁt for the professor.

My initial plan was to use my expertise in working with microcomputers that I had built, costing me around $8,000 each, having the professor help me rewrite his software to work on the cheaper mac hines using a computer language that I became familiar with in the early days, and concentrate on those 60 customers netting us $1.2 Million in proﬁt instead of the measly $128,000 gross proﬁt do llars less cost that the company ea rned with me doing the selling.

To my surprise he said “No!” His reasoning was that it would make his software easier to steal. I guess they don’t give out PhD’s for no reason, so in 1981, the professor and I parted ways. The disagreement was over the direction he was taking the company. My advice — which I believed then and believe now was critical to the survival of what he had built — was not what he wanted to hear. He had his vision. I had mine. The two were not compatible.

I have never regretted that parting. What I carried out of it was something more valuable than any commission I might have earned by staying: a complete working knowledge of the jobber industry, a clear-eyed view of where convenience retail was going, and the beginning of the ﬁfty-year journey that this book is the result of.

Bobby, wherever you are — you would probably be in your mid -seventies by now — I hope you pulled it together. I hope the stores did well. And I hope you know that the conversation you drove ﬁfty miles to have, the one where I failed to be your savior, turned out to be the conversation that launched everything that followed for me.

In the next chapter we will abandon the generalities and dive into the current state of affairs that can be used as a roadmap to plan the next decade of retail and the steps we must take to save it.

Chapter Eleven – Which Horses Are You Feeding?

A picture worth more than a thousand words — and what it reveals about the inventory problem killing independent retailers

Imagine for a moment that you are in the business of racing horses. At this very minute, you have ten horses in your stables, all of them represent ed in the three categories be low:

C ategory #1: The three on the left are your thoroughbreds. The ﬁrst horse has a diamond- encrusted crown on its head. The second is draped in a winner’s garland of roses. The third wears a luxurious championship blanket — the kind that gets thrown over a horse in the winner’s circle when the race is done and the crowd is on its feet. These horses are worth real money. These are the horses you build your business on.

Category #2: Six of the remaining horses (from left to right) are something less than thoroughbreds.

One is an ordinary, unremarkable animal — nothing wrong with it, nothing exceptional about it either.

One has a front leg in a sling, wrapped in bandages. He still hobbles around on the track but you can’t take him out of the lineup because he belongs to your wife’s oldest brother.

One is feisty and bright-eyed and appears ready to run. You keep her around because she shows up at every race and the fans think she’s pretty.

One has a hot water bottle strapped to its back, a warm coat across its ﬂanks, and a thermometer hanging from its mouth — this horse is clearly sick.

One is asleep, head dropped, eyes closed, dead to the world.

And the last is wearing an expression that can only be described as ridiculous — crossed eyes, tongue lolling out to one side.

Category #3: The tenth horse is dead! Should be obvious, lying on its back. All four legs point ed straight up at the sky. Flies are circling. He’s there because everyone has forgotten about him. You can smell the stench but you have become so used to it by now you b arely notice it anymore. When found you give him a bath and stick him back in the lineup, but burying the poor animal is out of the question. You paid good money for him, and you’re praying for a miracle that he will be resurrected someday and win a race. But he never will because he is DEAD!

Every convenience store in America has all three of these categories. Most operators could not tell you which is which.

Reading the Paddock

Now. Here is the question that should stop every convenience store operator reading this book cold: if I walked into your store right now and I asked you to sort your inventory into these three categories, could you do it?

Could you point to your three thoroughbreds — the products that are carrying your proﬁts, driving your repeat traffic, and earning their shelf space every single day?

Could you identify the horse with the sling — the product whose sales are declining and whose trend line has been pointing downward for six months but that nobody has pulled yet? Can you ﬁnd the sleeping horse — the product that turns over twice a year, sits on your shelf for one hundred and eighty days at a stretch, and ties up capital that could be working somewhere else?

And last but by no means least, can you ﬁnd the dead horse s — the products that have not moved in so long that they are not merely unproﬁtable but actively costing you money in shelf space, insurance value, and inventory carrying cost, and that the supplier put there because it was convenient for him, not because a single customer in your store has asked for it?

In the supplier-dominated model that built most of the convenience stores now operating in America — in which the grocery distributor stocks the shelves, the manufacturer sets the prices, and the store owner collects the register receipts — the honest answer to all of these questions is “NO”.

The store owner cannot sort his inventory this way because nobody has given him the tools to do it, and even if he had the proper tools, his suppliers are working against him because they assume control of his inventory, as per their agreement and the ir suppliers’ opinion is the retailer is not capable of managing their inventory because the supplier has made it so. It’s a ridiculous cycle of problems th at neither the supplier n o r the retailer has the tools or the knowledge to sort out.

The supplier looks at what they delivered to the store in the previous weeks or months and del ivers the same stuff again with the emphasis on what he needs to get out of his warehouse before it reaches it s expiry date.

Through the distributor, the manufacturer puts up signs for whatever he is trying to move. The company, the store and the clerk behind the POS has no idea what the margin is on any item being rung up, let alone which products are performing and which are dead weight. It’s a lot like my friend Maxx Baer said in a B everly Hillbillies episode, “Like so rting wildcats in a burning hayloft.”

And so the thoroughbreds do not get the attention they deserve. They do not get priority shelf positioning, adequate stock levels, or promotional investment proportional to what they actually return. And the dead horse — the product that has been lying on its back since last quarter, legs in the air, ﬂies circling — is still on the shelf. Still being reordered by the supplier, because the supplier’s interest is in moving product out of his warehouse, not in optimizing the return on your square footage. You are still paying for it. You are still carrying it on credit. It is still taking up spaces that your best horses could be standing in.

This is not a small problem. In a store with four thousand active SKUs — a typical mid-sized convenience store assortment — research in retail inventory management consistently shows that 30% of the UPCs generate ALL of the proﬁt, 55% – 60% are breakeven at best, and 10% – 15% is dead as a doornail.

In plain language: 70% of what is in the average convenience store is some version of a sick horse, a sleeping horse, or a dead horse. And most operators are feeding all ten horses exactly the same way.

The Cost of Not Knowing

There is a particular kind of ﬁnancial damage that is invisible precisely because it looks like normal operation. The store is open. The shelves are stocked. Customers are coming in. The register is ringing. Everything appears to be working. What does not appear — what cannot appear without a deliberate system designed to surface it — is the gap between what the store is earning and what it could be earning if the thoroughbreds were running free and the dead horses had been removed from the paddock.

Consider the time line with regards to a single example:

A convenience store carries a private-label energy drink that the supplier introduced eighteen months ago on favorable credit terms, with prominent display placement and introductory signage.

In the ﬁrst sixty days, it moved adequately. Then a national brand competitor introduced a new ﬂavor, took the same customer segment, and the private-label drink’s velocity dropped by 70 percent.

The supplier, whose interest is in clearing the product from his warehouse, has continued to replenish it on the store’s regular delivery cycle.

The store is now receiving twelve cases a month of a product that turns less than two cases a month. The remaining ten cases sit. They age. They approach their best -by date. They eventually get marked down or discarded. The shelf space they occupy — four linear feet of prime eye-level placement that the store’s top – turning beverage could be ﬁlling — generates a fraction of what it should.

What A Sweet Deal For Suppliers

The above scenario is not unusual. In the stores I have worked with over ﬁfty years, it is the norm rather than the exception. And it is not the result of incompetence. It is the result of a system that was never designed to give the store owner this information in a usable form, at a usable time, with a usable recommendation attached.

Why? He was never expected to need it, no more than a person mowing your grass is expected to know the value of your property.

Store owners were expected to move supplier s’ inventories and take a small percentage of the proﬁt for handling the inventory transaction between the supplier and the consumer.

The remedy is not complicated. It is not expensive. It does not require a technology investment that only a chain with a hundred locations can afford. What it requires is a decision — a decision to know, with precision, which horses you have and what each one is doing. Everything that follows in this book is built on that decision and on the speciﬁc tools that make it possible to act on it.

The horse with the diamond crown is in your store right now. So is the dead horse. The question is which one you are managing — and which one is managing you.

• * *

Chapter Twelve – The Magic Show That Passes for Bookkeeping

How the system that was supposed to track your inventory was designed — accidentally or otherwise — to serve everyone but you

Let us begin with a fact that is uncomfortable for everyone in retail, from the largest chain in the country to the smallest independent operator:

Virtually no retailer, regardless of size, actually knows how to manage inventory properly.

This is not an insult. It is a diagnosis. Walmart does not know. Target does not know. Best Buy does not know — not in the sense of having real-time, item-level visibility into what is moving, what is stalling, and what is quietly costing them money while sitting on a shelf. They have sophisticated systems that approximate this knowledge. They have enormous teams of analysts working to close the gap. But the gap is real, and at the scale of the independent convenience store operator — with a fraction of the technology budget, a fraction of the staff, and a supplier relationship that was built to favor the supplier — the gap is not a nuance. It is a chasm.

But the day is coming, and that delay between now and then is critical to the survival of small er independent retailers. Most who are oblivious to the change.

I sincerely doubt you will ﬁnd a retailer who knows nothing about Artiﬁcial Intelligence, which covers a range of subjects best co vered in my books, “Retail is Detail” and “AI An action that appears human”. But there are actions that smaller retailers can take at this mo ment that will guarantee their survival over the next 5 – 10 years, and who knows what epiphanies might occur d u ring that time?

To understand why, we have to go back to the period before the utilization of barcodes changed everything.

Before the Universal Product Code became standard across retail, the industry relied on something called the Stock Keeping Unit — the SKU — to identify products.

The SKU was a practical tool for a practical problem: how do you track inventory when the same type of product comes from multiple manufacturers, any one of which might be substituted for another on any given delivery?

The answer was to assign a single SKU to all products of the same kind, regardless of the manufacturer. A can of green beans was a can of green beans whether it was marketed with the brand Del Monte or Great Value, even though they might be sold at different prices and earn different proﬁts.

Distributor A’s can of beans and Distributor B’s can of beans carried the same SKU, because for inventory purposes they were considered interchangeable. The system was efficient. It was also, from the retailer’s point of view, the beginning of a long and costly loss of visibility into his own business.

Distributors continue to use SKUs — or their own proprietary numbering schemes — in exactly this way: to identify products that have a direct correlation with others, to track substitutable inventory, and to manage their own warehouse operations. The SKU tells the distributor what category of product he is moving. It does not tell the retailer what speciﬁc product his speciﬁc customers are buying. Unless on e manufacturer has a prom otion going on, who cared?

The system is far from perfect and results in an SKU represen ting “Del Monte Green Beans” one day and “Bush’s Apple Pie Flavored Baked Beans” the next. The picker in the distributor’s warehouse could care less, and most of the time the retailer paid no attention to the swap. It may have been okay when the selling price and resulting proﬁts were the same, but if Del Monte has a promoti on and Bush’s had no such promotion, the proﬁt earned on one versus the other was ambiquous. But then it gets worse.

Retailers, for their part, adopted an even broader system. By the 1990s, the concept of “category management” had become fashionable throughout retail — the idea that products should be grouped into large, manageable buckets for planning and accounting pur poses. Candy. Cigarettes. Soft Drinks. General Merchandise. These categories were useful for some purposes and deeply destructive for others. They were useful for high-level planning conversations with major suppliers. They were destructive because they erased, at the bookkeeping level, the individual identity of every item in the store.

Here is what this means in practice. When a customer purchases a speciﬁc item at the point of sale, the transaction is recorded by Universal Product Code — the barcode on the package. The POS system knows exactly what was sold: not “a candy bar” but a speciﬁc brand, ﬂavor, size, and price.

That item-level data exists. It is captured at the moment of sale. And then, almost immediately, it disappears into the accounting system, swallowed by the category it belongs to. The bookkeeping system does not track individual UPCs. It does not track SKUs. It tracks category totals — the aggregate retail value of everything sold in “Candy” or “Soft Drinks” during a given period. The individual item ceases to exist as a ﬁnancial record. Its cost ceases to exist. Its margin ceases to exist. Its velocity — how fast it turns, how often it needs to be reordered, whether it is growing or declining — all of it dissolves into a category average that tells the store owner almost nothing about what is actually happening on his shelves.

In convenience stores, the retailer expects the supplier to take care of this by providing the retailer with the “Manufacturer’s Suggested Retail Price” (MSRP) for every item they push to the store. If the store expected a category to earn a 30% proﬁt, the manufacturer would suggest the retailer sell the product based upon the formula, Retail = Cost/(1-30%)

An item costing the retailer $1.00 would produce an MSRP of $1/. 70 = $1.4285711429 or simply $1.43. Retailers who th ought Cost plus a 30% mark -up continues to cost them money. The lack of math skills by retailers cost s them money.

Once a month, a team of inventory counters arrive at the stores with c a lculators and walk every aisle. They count the retail value of what is on the shelf, by what they believe to be category. The total gets entered into the books. The store owner reconciles what he paid the vendor, what he sold according to the register, and what is still sitting on the shelf, and from this reconciliation he derives something that is supposed to resemble a proﬁt and loss ﬁgure. The process, in my ﬁfty years of watching it up close, is less a bookkeeping system and more like a magic show. Things appear and disappear. Numbers reconcile without revealing anything. At the end of the year, the store owner — or the accountant working from the same thin data — produces a ﬁgure that represents something in the neighborhood of a guess as to whether the store made money. In a single- store operation, this is a problem. Across twenty or ﬁfty or a hundred stores, it is a catastrophe.

And the inventory procurement side of this equation is, if anything, worse.

Very few convenience store retailers actually order their own inventory. The process of deciding what comes into the store — what products arrive, in what quantities, on what schedule — is, in most independent operations, left almost entirely in the hands of the supplier.

Headquarters, if it exists at all as a functional entity rather than a name on a bank account, often has no reliable knowledge of what is currently sitting on the shelves of stores that may be a hundred miles away. There is no systematic mechanism for comm unicating that information. And so, by default, the supplier ﬁlls the gap. The proﬁt actually earned at a store is the result of a best guess scenario that deﬁes all logic.

Some suppliers send what they call pre-salesmen into the stores ahead of a delivery — representatives whose job is to assess what the store needs and prepare the order accordingly. These pre-salesmen are not retail analysts. They are not category managers. In most cases, they know less about what is actually selling in a given store than the store’s own manager does — and the store’s own manager, as we will see shortly, has very little institutional support, authority, or information to act on what she observes.

The pre-salesman walks the aisles, notes what appears to be low on the shelf, and writes an order that is heavily inﬂuenced by what his employer needs to move out of the warehouse.

This is not always deliberate manipulation. But the incentives are aligned in one direction: toward the supplier’s inventory needs, not the retailer’s sales performance.

The result has created, over decades, an enormous opportunity for suppliers to misrepresent their expertise, claiming that they understand the retailer’s market better than the retailer does and that the retailer should defer to their judgment on product selection, quantities, and placement.

When this relationship goes wrong — and it goes wrong regularly — the retailer’s most obvious remedy is to change suppliers. Rarely does this solve the underlying problem. A new supplier brings the same structural incentives, the same pre-salesman model, t he same category-level bookkeeping, and often a new set of slow -moving products that need to be cleared from a different warehouse.

In 2008, I explained this problem with one of my clients owning 40 stores. Finally seeing the problem, he authorized me to go to a beer distributor to announce that the company will henceforth be placing beer orders based upon what the store needed and a pre -salesman w ould no longer be required. I kid you not, the supplier actually threatened me with bodily harm if I did not leave his office immediately and called my client to com plain.

Shortly after that my client and I held a meeting with ﬁve of his major distributors including a different major beer distributor, a major soft drink supplier, a major grocery supplier, a d irect store delivery chips vendor, and a miscellan eous notions vendor where each vendor agreed to coop erate in such an arrangement, but after a year of excuses on their part we ﬁnally gave up. The idea to launch such a new method of inventory management was not in their best interest.

I have had ﬁfty years to study this problem. Fifty years of sitting across from store owners who could not tell me with any conﬁdence what their best-selling items w ere, let alone which products were draining their margins and which were building them. Fifty years of watching the same supplier-dominated system produce the same results: a retailer who believes he is running his business when in fact his business is being run for him, by people whose interests are not aligned with his own.

The ﬁx, once you fully understand the problem, is elementary. And I mean that word precisely. The steps required to take control of your own inventory — to know what is in your store, what it costs you, what it earns you, and what your speciﬁc customers actually want — are not complicated. They are systematic, they are teachable, and they work. But before we get to those steps, we need to address something more fundamental. Because the bookkeeping problem and the procurement problem are not actually the root of the crisis facing the independent convenience store operator. They are symptoms.

The root is the people problem. And the people problem starts on a day most operators have long since stopped thinking about: the day they hired their ﬁrst employee.

• * *

Chapter Thirteen – Back to the Beginning

Why the hierarchy is all wrong, who is actually running the store, and what needs to change starting from the very ﬁrst conversation

If you ﬁnd yourself lost in the woods and you want to get back home, the worst thing you can do is meander through the forest looking for a sign that says “This Way →.” You may convince yourself that you have found the right path. But that path may lead you to a cliff. It may lead you to quicksand. It may lead you somewhere considerably worse. The sign that looks like the answer rarely is.

The independent store operator who tries to ﬁx his business by patching one problem at a time — better signage, a new supplier, a different POS system, a loyalty program — is wandering through the woods looking for signs. He will ﬁnd some. He will follow them. Some will take him somewhere useful. Others will take him over a cliff. And because he is navigating by sign rather than by compass, he will not know the difference until it is too late.

Let me take you back to the very beginning. Not to last year, or to the last time you hired a manager, but to the ﬁrst day. The day you hired your ﬁrst employee.

The Company Story

The ﬁrst thing any operator needs before sitting down with a job applicant — any applicant, for any position — is a company story. Not a mission statement. Not a values poster. A story: where this business came from, what it is trying to be, and why a person of ability and ambition might want to be part of it.

If you do not have a company story, make one up. I am dead serious. Create one. The story does not need to be dramatic. It does not need to involve a family legacy or a founding vision. It needs to give the person sitting across from you a reason to care — a reason to see this job as something other than a transaction in which they exchange hours for dollars and you exchange dollars for a warm body behind the POS.

The story is not for you. You already know why you are in this business. The story is for them — for the person in the chair who drove to this interview for a reason you do not yet know, and whose decision about whether to give this job their genuine effort will be shaped, more than you realize, by the ﬁrst impression your organization makes.

So before you ask a single question, tell the story. And then — this is the part most operators skip entirely — ask them why they are here.

Find out what brought them to this interview. Was it a friend or acquaintance who works for you and recommended the job? Is it because their parents told them they needed to ﬁnd work before going off to college in the fall? Do they simply need cash — a speciﬁc number, for a speciﬁc purpose, maybe a down payment on a car? Did a parole officer inform them, with some urgency, that they had two weeks to secure employment? Are they bored, between things, drifting? Do they have a friend working at a nearby location who made it sound like a decent enough place to spend some hours?

These are not disqualifying answers. Any of them might describe a person who becomes a genuinely excellent long -term employee. But you need to know. Because the way you reach a person — the way you make this job feel worth doing well — depends entirely on where they are starting from.

The person who needs a speciﬁc amount of money by a speciﬁc date needs to understand how this job gets them there. The person whose parents sent them needs to understand that this job is not a placeholder but a genuine entry point into a career that pays more, grows faster, and asks more of them than they might expect.

The person who showed up without a clear reason needs to be given one.

And that brings us to the central message every applicant should hear before they leave this ﬁrst conversation: you are not looking to ﬁll a shift. You are looking for someone who is looking for a career.

Tell them that plainly. Tell them that the company will invest real time and real money in training them. Tell them that advancement into management is not a vague possibility but an active goal of the organization — that the people running stores and regions started exactly where they are sitting now, and that how quickly they advance depends largely on how seriously they take what comes next. Make this feel like an opportunity, because if you have built the structure this book is about to describe, it genuinely is one.

“But retail store employees are dumb as a box of rocks! They have the brains of a sin gle cell amoeba. They cheat, they will steal you blind, run your customers off, and most won’t even stay around long enough to receive their ﬁrst paycheck!”

I’ve heard it all, and some of it is true, because you’ve made it so. But it is an unfortunate lie, perpetrated by a current staff of poorly trained managers who hold themselves superior to ev eryone else, and nine times out of ten, they are the ones keeping those “truths” alive.

The new employee must leave the interview feeling three things:

1. That they are wanted. 2. That they are needed. 3. And that what they are walking into is a partnership — one with expectations on both sides, one that pays off for both sides when it works, and one worth taking seriously from the very ﬁrst day.

Do not take this lightly. Every decision that follows — how well this person performs, how long they stay, whether they become the “Section Manager” (described in the chapters ahead) or the problem that has to be replaced in six months — traces back to this ﬁrst conversation. The investment made here, in time and honesty and clarity of expectation, pays returns for years.

The conversation skipped, the body hired without a story told or a reason given, produces what most retail store operators have right now: a workforce that does not know why it is there, managed by a supervisor who got the job by accident, running a store that is operating without anyone genuinely in charge.

The Wrong Person at the Top of the Wrong Ladder

The hierarchical structure of a retail convenience store is, in most independent operations, built incorrectly from the ground up. And a clear-eyed look at what is actually happening in remote stores — the ones located forty, sixty, a hundred miles from the main office — proves the point.

Most of these stores are run by a “Store Manager” and a small team of cashiers. The Store Manager’s title suggests authority, training, and management capability. The reality of how that title was conferred tells a different story. In the vast majority of cases, she was promoted not because she demonstrated management potential, not because she was recruited and trained for a leadership role, but because she was the best cashier working there when the previous manager left. She was available, she was reliable behind the register, and she was there. That was enough.

Who is she? In the reality that most operators would rather not say out loud? In many cases she is a single mother with two or three children, paying a substantial portion of her paycheck for daycare, supplementing her income with food stamps or other public assistance, and stretched thin in ways that have nothing to do with her competence and everything to do with her circumstances.

In other cases she is married to a man who drains the household rather than supporting it — someone who spends his evenings watching football with his friends, who cycles through jobs without holding any of them, and whose presence in her life adds pressure rather than stability.

She is doing her best. Her best, under these circumstances, goes almost entirely toward survival. There is very little left over for managing inventory, developing staff, enforcing standards, or running a retail operation that a supplier, a hundred miles away, is counting on to generate a proﬁt for someone other than himself.

The result is a store where, if you are being honest about it, virtually no one is actually managing anything.

Products sit on shelves because no one with the authority to remove them has the information to know they should be removed. The cashiers do their jobs — they ring up purchases, they make change, they keep the coffee fresh, they stock the shelves and clean up messes — and they report to a manager who is doing her best to hold together a role she was never trained to do.

The supplier’s pre-salesman comes in, notes what looks low, writes an order, and leaves. More often than not, he is looking for holes to ﬁll with his or her boss’ s excess stock. Trying to win a trip to Las Vegas for the person that moves the most junk out of the warehouse that nobody wants.

Pre-sa lesmen are given powers they should never have. Once I was in one of my client’s stores when the front doors ﬂew open and a driver for a supplier was pushing a n eight-foot train of soft drinks through the door.

The store manager came ﬂying out o f his office and said, “What is all this? I don’t have room in my coolers for 80% of this product.” To which the driver announced, “The Pre-salesman told me if you refuse any part of the o rder to bring all of it back”. Some of the product was desperately needed. If the entire order was rejected and the store ran out of that product, his job would be in jeopardy. There was no one to call. His boss was out of touch. The crisis needed an immediate answer. He ended up accepting the order which resu lted in the entire shipment being wheeled into the co olers leaving no place to get thr ough for the employees to restock the shelves.

I’ve seen this scenario time and time again over the p ast 50 years and it’s heart breaking.

The inventory count happens at the end of the month. The books get reconciled. And somewhere, in an office that may be a hundred miles away, a number gets produced that is supposed to represent the health of this store.

It does not.

The structure that produces this result — the cashier- promoted -to -manager model, the supplier -managed inventory, the category-level bookkeeping — is not an unfortunate accident. It is the predictable outcome of a system that was never designed to give the store owner control. Taking back that control requires rebuilding the structure from the foundation. It requires rethinking who manages what, who is accountable for which outcomes, and what information needs to be in whose hands at what time and it all starts with the employees that manage your future.

The chapters that follow describe exactly how to do that — starting with the speciﬁc workforce structure that replaces the broken hierarchy, and ending with the complete system for managing inventory that takes the supplier’s hand off the throttle of your own store.

• * *

Chapter Fourteen – The Seventh Store Rule

How the 1980s expansion boom created a supervisor model that was wrong from the start — and locked an entire industry into a relationship it still cannot escape

In the early days of the 1980s, as convenience stores began to multiply across the country with a speed that few people in the industry had anticipated, retailers confronted a problem that was purely logistical but had consequences that reached far deeper than logistics: how do you maintain any meaningful communication between a headquarters operation and a set of stores that are scattered across a county, a region, or a state?

The answer the industry settled on was the store supervisor. One supervisor would be responsible for a cluster of stores. He — and in that era it was almost always a he — would drive a circuit. One store per day, ﬁve days a week, with allowances made for travel time, paperwork, and the occasional crisis that required an unscheduled visit. The math produced a natural ceiling: one supervisor could realistically cover seven stores. Not eight. Not ten. Seven.

This number — seven — is the ﬁgure the industry should have built its entire organizational thinking around and, for the most part, did not.

When a retailer owned seven stores, the supervisor model functioned, after a fashion. Each store got a visit roughly once a week. The supervisor could observe what was happening, relay information back to headquarters, ﬂag problems, and carry instructions in the other direction. It was imperfect, episodic communication — a weekly snapshot rather than a continuous picture — but it was something. It was a connection between the store and the people responsible for it.

The opening of the eighth store broke that connection.

With eight stores, one supervisor visiting one store per day and an add itional store occasionally in a work – week, could no longer complete a weekly circuit. Coverage slipped. Visits became less frequent. The stores that were geographically inconvenient — the ones at the far end of the route, the ones that required an extra hour of driving — began to see the supervisor every ten days, then every two weeks, then sporadically at best. And because the entire model assumed that the supervisor’s visit was the primary mechanism by which headquarters knew what was happening in the stores, anything that reduced visit frequency reduced organizational visibility in direct proportion.

The solution was obvious: hire a second supervisor. But hiring a second supervisor meant restructuring the circuit, renegotiating routes, and — most signiﬁcantly — confronting the bookkeeping and administrative complexity that came with managing what was now, effectively, two separate supervisory operations under one roof.

Major bookkeeping issues began to surface. Companies that had coasted through the ﬁrst seven stores on informal systems and handshake accounting suddenly discovered that the eighth store required a level of administrative infrastructure they had not built and were not prepared to fund.

The companies that took this seriously — that recognized the opening of the eighth store as a genuine organizational inﬂection point requiring investment and restructuring — survived the expansion and grew. The companies that treated it as a staffing problem rather than a systems problem began to lose money and customers in ways they could not always trace back to their source.

The Real Deﬁnition of Mom and Pop

The convenience store industry has long deﬁned the Mom and Pop operator as someone running between one and ten stores. This deﬁnition is wrong, and it is wrong in a way that matters.

The meaningful break in the industry is not at ten stores. It is at seven. One to seven stores is a Mom and Pop operation in any real sense — a business that can, however imperfectly, be held together by a single supervisory layer, a single set of supplier relationships,

and a single bookkeeping framework. The moment the eighth store opens, the operator has entered a different category of business entirely, whether or not they recognize it, whether or not they are prepared for it, and whether or not the industry’s standard deﬁnitions acknowledge the distinction.

The operators who failed to recognize this threshold — who opened the eighth, ninth, and tenth stores on the same organizational model that had served them through the ﬁrst seven — are among the operators who lost the most ground in the consolidation wave described previously. They expanded without restructuring. They added stores without adding the systems those stores required. And they remained dependent, for want of anything better, on the one relationship that was always happy to step into the vacuum: the supplier.

• * *

Chapter Fifteen – The Love/Hate Relationship That Runs the Industry

As stores multiplied and the organizational gaps between headquarters and the shelf widened, the plan to allow suppliers to pick and control the stores’ inventories became not merely convenient but structurally essential. Retailers had no system for managi ng inventory themselves. The supervisory model was stretched thin. The bookkeeping framework tracked categories, not items. And so the supplier ﬁlled the space.

The arrangement that emerged was simple in outline and corrosive in practice. Retailers became, in effect, locations through which their suppliers moved inventory. The retailer’s proﬁt — to the extent it could be measured in a category-level bookkeeping s ystem — was the commission created by the spread between what the supplier charged the store for the goods and what that same supplier advised the store to charge the consumer. The retailer was not selecting products. He was not managing margins. He was re ceiving a delivery and adding a markup that somebody else had calculated. The retailer became a conveyor of suppliers’ stock and raked off a tiny bit of proﬁt from the transfer.

In this arrangement, what “sold well” in a store was determined less by what customers actually wanted than by what the supplier chose to deliver. A product moved because it appeared on the shelf, and it appeared on the shelf because the supplier put it there. When a supplier made a poor purchasing decision for a store he sold to — when he overestimated demand for a product, overstocked his warehouse, or needed to clear out goods approaching their best-by date — that mistake did not stay in his warehouse. It traveled, on the next delivery truck, to the retailer’s store. It went into the storeroom. It aged. And eventually, when it became unsellable, suppliers rarely picked up their mistakes, it ended up in the dumpster behind the store or stack in the back of the retailers storeroom to be discovered years in the future by archeologi sts trying to determ ine what it could have possible been used for.

The costs of that mistake are not borne by the supplier who made it. It is borne by the retailer who accepted the delivery (oftentimes under duress), paid the invoice, and marked down or discarded the product.

This is the love/hate relationship that has dominated the convenience store industry from the 1980s to the present day. The love is real: the supplier provides the product, manages the logistics, and, in many cases, handles the promotional calendar that drives traffic into the store. For an operator who has no system of his own, this is an enormous and genuinely valuable service.

The hate is equally real: the retailer who looks closely enough at his storeroom — at the cases of product he paid for, received, and cannot sell — understands, at some level, that he is absorbing costs that belong to someone else. He just lacks the tools to quantify exactly how much, or to do anything about it.

With all stores being unique — operating in their own neighborhoods, serving customers with different demographics, different tastes, different shopping patterns — the supplier’s one-size -ﬁts -all delivery model was guaranteed to produce winners and losers on the shelf. In one store, a product ﬂew. Three miles away, in the same city, it sat. The supplier’s distribution system did not have the resolution to see this difference, and the retailer’s bookkeeping system did not have the resolution to report it. The result was a retail landscape in which the storeroom and the dumpster served as the industry’s primary inventory correction mechanisms.

They still do, in most operations, today.

The operator who is serious about changing this — who wants to know what his customers actually buy, stock what they want, and stop paying for what they do not — needs more than a new supplier. He needs a new system. And he needs the people, properly structured and properly trained, to run it. That is what the remaining chapters are about.

• * *

Chapter Sixteen – A S ystem Designed to Fix a Failed System

This supplier-driven model creates:

Inventory distortion
Cash -ﬂow crises
Dead products
Misleading P&Ls
Unmanageable shrink
Store -level chaos
Chain -level blindness

Retailers think they’re running stores. But in reality:

Suppliers are running the stores — and retailers are just hosting the shelves.

And the suppliers know less about what’s happening in the stores than the retailer could know with ease — if they had the right system.

Why This Matters Before We Introduce the Fix

Once you understand the problem, the ﬁx is elementary.

But before we introduce the ﬁx, we must ﬁnish laying the foundation:

The employee problem
The hierarchy problem
The supervisor problem
The eighth-store problem
The supplier-control problem
The inventory-identity problem
The 30–60– 10 problem

Because once you see the entire picture, the solution becomes obvious — and unstoppable.

This will be a massive change for most of you, a walk in the park for many of you, and totally out of the que stion from some of you. But regardless of where you fall in the classiﬁcation, read it, study it, dream it, because y ou are going to feel the effects of it sooner than you think.

The era of small retail began to fail years ago. Walmart didn’t kill it — customer habits changed, the government wanted ‘their fair share’ and suppliers got greedy. In spite of it all, the American Dream continued to work for some, but nowadays you have to seek it out.

Amazon is giving Walmart a run for their money. Walmart is desperately trying to map out a future for it’s superstore concept, but being dragged deeper and deeper into the on -line business model, self- checkout, self-pic kup and 2-day delivery, even faster in some areas.

Here’s something you might not know

When y ou r customers purchase something to receive at a future date, they are engaging in delayed gratiﬁcation and their brain rewards them with anticipatory dopamine even more so than when the product is officially received in their hands. If this subject appeals to you, you can read more about it at nuerolaunch.com. Amazon is highly sensitive to this and their entire purchase adventure is geared around it.

One of Amazon’s greatest advantages is their ability to change prices using a sophisticated, AI driven dy namic pricing system that operates in real time across its marketplace.

Recently, Walmart announced that they would be implementing “Dynamic Pricing” in their stores. It won’t work, no t in Walmart’s stores, beca use their stores are too big.

As of this writing, 18 states plus the District of Columbia (DC) require some form of man datory pricing labels in their stores making the idea of Dynamic Pricing somewhat ambiguous. Thirty-three states have no unit pricing provisions. http://www.n ist.gov is a good place to refer to current laws on pricing.

What is Dynamic Pricing?

One of the best ways to explain Dynamic Pricing comes from my own experience working in and researchi ng the activity in stores from 2008-2020. I noticed that Honey Buns sold like hotcakes around breakfas t time, dropped off sharply after 9 AM, picked up at lunch and supper time and dropped off again toward the end of the day with a little bump late at night. Yet, the rack containing honeybuns stayed in the store, causing cus tomers to detour around the entire time the store was open.

The idea occurred to me that by varying the pricing throughout the day, especially after the breakfast rush, in the mid- afternoon and afte r suppertime, the store could turn more pastries overall. Not only would this increase sales, it would eliminate the overstock faster and decrease the out of dates that would have been thrown away.

• * *

Chapter Seventeen – Small Retailers Growth and Shrinkage

A pie chart I created in 1998 gives us a look into the conve nience store market 28 years ago:

In 1998, one to ten store operators made up the smallest segment of the market an d the rest of the market was controlled by the larger chains.

What has occurred over those 28 years is hard to digest. Technology, or the lack of incorporating what’s available is the reason for the dramatic changes that need more study. But we know enough now to slow down and consider our next move.

Twenty -eight years later the comparison is dramatic.

Shown in a different kind of chart: Over the past twenty- six years, the 1-10 store operator segment has grown from 9,313 stores to 94,928 stores and controls 63% of the market, an INCREASE of 52%.

Over the same period the over 11+ store operator segment has dropped from 110,0 8 6 stores to 55,246 stores and controls only 3 7% of the market… a DECREASE of 55%.

The middle segment, the 11-500 store operators had 54,446 stores in 1998 and dropped to 23,585 in 2024, a loss of 43% of all stores over the same period. The 11+ store operators are dying and may not last to see the year 2030. We can slow this slide by looking at the difference between how the 1-10 store operators run their stores in comparison to the rest of them. The difference boils down to one thing… MANAGEMENT.

The Mom & Pops don’t carry near the inventory the larger chains do. Many are family run organizations and they put fewer items on their shelves. They are more prone to putting only the items in their stores that cus tomer s WILL BUY and not what they MIGHT BUY. To put it bluntly, they are less controlled by their suppliers.

The larger convenience store s stock around 4,000 unique items. Twice the number need ed to meet customer service level, and the retailer bares the costs of managing the stock and paying the carrying costs.

The Direct Store Delivery driver simply ﬁlls the racks whenever he c omes around and leaves the manager a had written, almost most illegible invoice. The results are the store ends up paying for product it will not sell and taking up space where faster moving items could occupy.

In a book I wrote over a decade ago, I called every item in a retailer’s store “a tiny little machine that generates cash”, and if it’s not doing that, it needs to either be ﬁxed or carried to the dumpster. It’s mere presence in your store is killing your business.

The business of acquiring the right inventory is not “rocket science”. Do you realize that a store with 4,000 items can result in 16 Million outcomes on your inventory when a customer walks in the door?

Why? Because your inventory creates a vast web of possibilities that might create a chain reaction over which you have no control.

Over a decade ago, when I was analyzing a store’s inventory (it’s my favorite pastime), when I noticed a cooler of two brands of chocolate drinks… Yahoo and Chocolate Flavored Muscle milk. I was curious, because I noticed an overstock situation in which customers in this store obviously preferred Yahoo over Muscle Milk, and looking at the nu mbers I discovered Muscle Milk was accumulating like c razy while Yahoo Choc olate drink was ﬂying off the shelves.

In my research, I noted that once in the fall and then again in the spr ing, one customer bought C hocolate Flavored Muscle Milk and 5 quarts of Pennz oil motor oil together… both times. The mystery was solved. It was easy to see that when that one customer bough t Muscle Milk, he change d the oil in his pickup. Was this information of any real value. Hardly, but the store stopped allowing the Muscle Milk delivery guy to stuff the coolers with his product and got with the distributor to inform him of the peculiarity.

In another case I had the occasion to talk to a cu stomer that was about to purchase two cases of beer to share with his buddies as they had scheduled a party to watch football.

As he was making his way to the sales’ counter, he received a phone call from his wife causing him to take back one of the cases of beer and pick up a l arge bag of baby diapers. Couldn’t afford both.

In another incident I got a call from one of my associates that had noticed one particular bag of potato chips was driving Coca Cola sales. Two weeks later the two distributors launched a sale that beneﬁted both companies and the retailer’s stores.

Things that we weren’t able to consider in 1980 are available today and retailers are ignoring them. Why? C omputers are running faster and storing more data.

In a recent press conference with Donald Trump, one gentleman reported that a Quantum computer w as solving problems in seco nds that wo uld have taken 72 years to accomplish just a year ago.

For a variety of reasons retail store operators ignore technological advantage s until they are forced to change. And by the n, the opportunity to compete has long since past.

T he small retail operator needs a new plan before it’s too late to change. And this is how you must proceed.

• * *

Chapter 18 – Your Management Reeks of the 1960’s

I’m old enough to remember the 1960’ s with great clarity. Shopping centers and malls were g rowing like crazy. Walmart hadn’t been invented yet and the Internet did exist until 1969 when a group of scientists created a network to share information. It wasn’t until the 1990s when it became widely available to the general public.

I was running my computer company in Hawaii, supporting one large enterprise there a nd my customer s on the US Mainland. That was a decade before we part nered with IBM to become the ﬁrst cloud computi ng software provider of ERP solutions in the United States, maybe in the world. But that didn’t happen until the Year 2000. I got the idea in 1990 from a Mountain Bell Telephone presentation at the IBM customer center in Honolulu that described the telephone system between Hawaii and the US Mainland and I was hooked.

By the year 2000, the Oil Jo bber industry had consolidated into a network of what was called “Super Jobbers” and drove most of the smaller op erations out of business. So, in 2003 I began to concentrate on the convenience st ore sector.

My plans were to redesign my system to integrate grocery suppliers, convenience st ores, oil marketers and POS systems in one seamless network. I tried to raise ﬁnancing but failed at getting the deal that I wanted. My plan was too adventurous for most venture capitalists to consider so I had no alternative but to ﬁnance the project from the income I was receiving from custo mer s I had dating back to 1981. Below is a pictorial representation of how the system functions.

The plan consisted of a large data center labeled ‘SRDC’ that would act as the control center for the entire ne twork. The SRDC would sit on the Internet with connections to all the partners. Our current data center

is located in Tampa, Florida and all of the software and data is hosted on that machine. Retailer’s headquarters operate on the network remotely. All of the programs they use are available to and Internet connection. No data is store on company’s computer s so there is no network maintenance to be performed. Customers can have their own LANs for other activity such as word pro cessing and spreadsheets.

The stores are connected to the SRDC and all data going to and from the stores is also connected remotely.

The grocery supplier (s) have secure connections to the SRDC, orders can be placed electronically and, if the retailer desires, the supplier can peer into the stores’ databases to see the disposition of the store’s inventory. The supplier has two levels of security which would prevent the retailer from getting into the supp lier’s computer without permission. There is no direct connection between the stores and the main office that prevents a store employee to have access to the office computer unless the office allows certain store person nel access. Multiple suppliers can be connected and an inﬁnite number of stores can be added to each company.

The network has been in operation for over a decade, but until suppliers are able to clean up their data to be compati ble with the SRDC they are not able to join.

The SRDC can connect to the POS systems in the stores and obtain real time data from sales, and the office can send price changes, deals, new items directed to the stores from the office. And the SRDC can be connected remotely to change prices on the POS using a cell phone. In other words, and office employee can change the price on a pack of cigarettes walking through the airport terminal in Tahiti.

more insights

Publications

A Warning F or the Next 250 Y ears

b y Bill Scott As America celebrates its 250th birthday, perhaps there is no better time to step back from today’s political arguments and look instead at the remarkable journey…

July 23, 2026

Self Help

Unlocking Your Brain’s Gatekeeper: The Reticular

Note: This blog is an extension of my book Second Cha nce and emphasizes the Reticular Activating System (RAS) as the brain’s “gatekeeper” between the conscious and subconscious mind, incorporating…

July 23, 2026

Second Chance and How It Relates To religion

For Centuries, Man Has Worship An All Powerful Omnipotent God That Is Seated In the Confines of the Subconscious Mind, And Without Our Constant Maintenance O f That Condition, Humankind…

July 23, 2026

Small Business Retails’ Last Chance

Small Business Retails’ Last Chance By Bill Scott

Chapter One – Empty Storefronts

Chapter Two – The Amazon Effect

Chapter Three – The Big Box Shadow

Chapter Four – The Cost Squeeze

Chapter Five – The Digital Divide

Chapter Six – The Regulatory Labyrinth

Chapter Seven – The Financing Gap

Chapter Eight – The Succession Crisis

Chapter Nine – The Survivors

Chapter Ten – Some of my best friends have been jobbers

Chapter Eleven – Which Horses Are You Feeding?

Reading the Paddock

The Cost of Not Knowing

What A Sweet Deal For Suppliers

Chapter Twelve – The Magic Show That Passes for Bookkeeping

Chapter Thirteen – Back to the Beginning

The Company Story

The Wrong Person at the Top of the Wrong Ladder

Chapter Fourteen – The Seventh Store Rule

The Real Deﬁnition of Mom and Pop

Chapter Fifteen – The Love/Hate Relationship That Runs the Industry

Chapter Sixteen – A S ystem Designed to Fix a Failed System

Why This Matters Before We Introduce the Fix

Here’s something you might not know

What is Dynamic Pricing?

Chapter Seventeen – Small Retailers Growth and Shrinkage

Chapter 18 – Your Management Reeks of the 1960’s

Like this:

Related

more insights

A Warning F or the Next 250 Y ears

Like this:

Unlocking Your Brain’s Gatekeeper: The Reticular

Like this:

Second Chance and How It Relates To religion

Like this:

Small Business Retails’ Last Chance

Small Business Retails’ Last Chance By Bill Scott

Chapter One – Empty Storefronts

Chapter Two – The Amazon Effect

Chapter Three – The Big Box Shadow

Chapter Four – The Cost Squeeze

Chapter Five – The Digital Divide

Chapter Six – The Regulatory Labyrinth

Chapter Seven – The Financing Gap

Chapter Eight – The Succession Crisis

Chapter Nine – The Survivors

Chapter Ten – Some of my best friends have been jobbers

Chapter Eleven – Which Horses Are You Feeding?

Reading the Paddock

The Cost of Not Knowing

What A Sweet Deal For Suppliers

Chapter Twelve – The Magic Show That Passes for Bookkeeping

Chapter Thirteen – Back to the Beginning

The Company Story

The Wrong Person at the Top of the Wrong Ladder

Chapter Fourteen – The Seventh Store Rule

The Real Deﬁnition of Mom and Pop

Chapter Fifteen – The Love/Hate Relationship That Runs the Industry

Chapter Sixteen – A S ystem Designed to Fix a Failed System

Why This Matters Before We Introduce the Fix

Here’s something you might not know

What is Dynamic Pricing?

Chapter Seventeen – Small Retailers Growth and Shrinkage

Chapter 18 – Your Management Reeks of the 1960’s

Share this:

Like this:

Related

more insights

A Warning F or the Next 250 Y ears

Share this:

Like this:

Unlocking Your Brain’s Gatekeeper: The Reticular

Share this:

Like this:

Second Chance and How It Relates To religion

Share this:

Like this:

Discover more from StoreReportAI