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COVID-19 Impact and the Future of Small Business
October 30, 2023

The Effects of COVID-19 on Small Retail Businesses

Since the emergence of the COVID-19 pandemic, the world has seen a widespread closing of businesses. Overall, businesses of all sizes were hit and the United States has seen a drastic decline in the number of active business owners.

The future of small business is uncertain. Downward demand shifts, health concerns, and enforced policies have forced many to shut down their business operations since the outbreak of the coronavirus.

For instance, a report from the NCBI states that between February and April 2020, over 3.3 million businesses were inactive, indicating a slump of 22 percent. This drop-in active businesses is the largest ever recorded in the U.S., with a loss in business activity spreading across almost all industries. Yet, against all odds, some small businesses have shown that there is a way to thrive even during these uncertain times.

In this article, we take a look at how some retail businesses have revamped their approach to prosper during the pandemic.

Data from the NPD Group suggests that the COVID-19 outbreak has accelerated digital adoption in retail: in 2018 digital foodservice accounted for only 5 percent of the retail food business, compared to 20 percent in 2020. Additionally, new users currently make up 48 percent of third-party foodservice delivery app users.  Yet, according to a survey conducted in the fall of 2020, about the impact of COVID-19 on small businesses, only 12.2 percent of small business owners reported that their operations were profitable and growing. This shows a decline of almost 20 percent when compared to the previous year.

To stay in the game, some small retail businesses have completely turned the tide around by shifting their trade towards products with increased demand. For example, Tokki, a reusable gift wrap company based in Seattle, has completely shifted its cloth inventory towards the production of face masks. Moreover, in an interview with CNBC, Josh Silverman, CEO of Etsy, has revealed that over 20,000 shops on his platform were now crafting and selling face masks. This number shows that many small entrepreneurs are ready to pivot their business operations towards products in demand.

For instance, the demand for cleaning supplies has skyrocketed since the outbreak of the coronavirus. Households, medical facilities, offices, and businesses are all in need of sanitizers and cleaners to stay on the safe side. The hand-sanitizing business alone is expected to reach $1.96 billion by 2026, up from $1.22 billion in 2018.

4 Common traits of businesses that thrived during the pandemic


When the pandemic started spreading and major regulatory procedures were set for businesses, retailers that were able to accommodate these changes successfully kept their doors open. For instance, contact-free pickup, home-shopping, and delivery options enabled many retailers to stay in the game.

Additionally, some businesses have reviewed their staffing policies by making their staff work alternate hours and shifts to reduce the risk of exposure to the pandemic. Changing your whole business model requires some gut, but flexibility is essential if you want to thrive during times of uncertainty.

Excellent Communication

Communication can be the difference between a struggling business and a flourishing one. Being transparent about what is happening and what your intentions are is vital. Keeping up with contact tracing and routinely communicating to your workers and consumer base maintains that much-needed trust factor.

Even if face-to-face interactions are limited during the pandemic, do not hesitate to use other communication channels to reach out to all stakeholders of your business. Social media, newsletters, and podcasts can help you get your message across. Choose what works best for your business and go for it.

Social Responsibility

Do not forget your social responsibility as a business owner. As a refresher, social responsibility simply means working towards the best interest of the whole society, while managing your business. Ensuring your business is socially responsible can have a significant impact on the way your brand is perceived and directly impact your business reputation.

Being socially responsible as a business can be achieved in a number of ways. For instance, following proper cleaning and sanitizing procedures during a pandemic or enforcing hygiene protocols in your business are good starting points. If you are in a state with mask mandates, you should also consider refusing entry to customers who are not wearing face masks. Yes, this leaves money on the table, but at the same time, it shows to your workforce and clients that you go the extra mile to ensure their safety.


While all businesses need a little creativity to shine, the pandemic has given the opportunity to many business owners to rethink their whole approach. The coronavirus may just be the chance you were looking for to test your latest idea. Being forward-thinking and finding new ways to solve your customers’ problems can give you the edge for fighting the pandemic.

Think out-of-the-box to find solutions for your customers and while you are at it, why not think of alternative ways to enhance your supply chain. Also, if you run a brick-and-mortar business, consider the different ways you can integrate technology to your physical store to enhance your customer experience.

Overcome Obstacles with Technology

Running a small business during a global pandemic is a daunting task, especially if you are in the retail space. Yet, as discussed in this article, there are businesses flourishing even during the COVID-19 outbreak. Adapting to the situation is the key to overcoming it, and technology may just be the piece of the puzzle that gives you the edge.

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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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