Is This The End For America’s Mom-And-Pop Stores?
This article is a part of my Best Reads of the Month section on my website www.mikegorlon.com. Each month I pick one or two articles or blog posts that I find on the internet which I thought were really insightful, interesting or moving. Then I share them with you. You can view the previous month’s articles by going to: https://www.mikegorlon.com/best-reads-of-the-month
August 2020: Is This The End For America’s Mom-And-Pop Stores?
Coronavirus has continued to ravage small businesses across the United States, including town favorites such as 38-year-old toy store The Dragon’s Nest in Newburyport, Massachusetts.
This Financial Times article (might be behind a paywall but if you google “is this the end for America’s mom-and-pop-stores”, then click on the article and answer some survey questions from Google then you should be able to read it) tells the story of a mom-and-pop toy store and the challenges local businesses face during coronavirus.
In addition to threats from online competition like Amazon and coronavirus, The Dragon’s Nest also faces economies-of-scale challenges that big companies like Walmart have but small businesses don’t. For example, Legos are a favorite toy for kids to play with but the manufacturer of legos, The Lego Group, requires a minimum order of $15,000 per year which can be a lot of capital for a small toy store to have tied up in a year for just one toy.
There have been many small businesses who have survived many recessions including the Great Recession but the coronavirus unfortunately has been too much to bear from all kinds of small businesses ranging from toy stores to restaurants to barber shops.
Big corporations have already had big advantages over small businesses for reasons such as economies of scale but another big advantage that has come to be of paramount importance during the coronavirus recession has been access to capital. It’s been very difficult for small businesses to get access to affordable capital, yet alone any capital at all, and this will likely continue to push the US economy into a continuing trend of a smaller percentage of small businesses compared to big chains.
Article link: https://www.ft.com/content/92427a94-ee5e-486c-9f6b-9e11e8362f41
