Q&A: How small shops are filling the void left by big box closures

Q&A: How small shops are filling the void left by big box closures

Some broad retail shifts are happening, from big box closures to a rise with independent specialty retailers that are not just surviving – but thriving. Often this success is due to smaller retailers staying nimble, community-focused, and tech-enabled.

These are some of the themes addressed by Andrew Stern, CEO of Quilt, a software company helping small, independent retailers modernize their operations through simple, powerful retail technology, in an interview with Digital Journal.

Stern shares real-world examples of resilience and innovation across niche categories like pet supply, sewing, framing and musical instruments.

Digital Journal: With all the talk of big box closures being on the rise, what do you think most people are missing about what that means for the future of retail?

1. Andrew Stern: The headlines about big box closures tend to focus on store counts and earnings misses, but they rarely explore what’s filling the void. What’s actually happening is a reshaping of the retail landscape – not a collapse. With a pre-pandemic average annual retail sales growth rate of 3.6% and an estimated 2.7-3.7% growth for 2025, consumer spending hasn’t slowed – it’s just shifting. Shoppers aren’t abandoning physical retail; they’re gravitating toward experiences that feel more relevant, more convenient. E-commerce exploded during the pandemic, but its share of total retail sales has plateaued around 16-17% since 2021, signaling that online retail isn’t replacing brick-and-mortar stores – it’s complementing it.

So if spending is relatively flat and e-commerce has plateaued, what’s filling the void left by these big box vacancies? We are seeing  a growing desire for retail that feels more personal. People still want to browse, ask questions, and walk out of a store having talked to someone who knows what they’re doing. When large chains leave a market, it creates an opening for specialty retailers to step in – businesses that are often better equipped to serve the specific needs of their community.

While they don’t hold earnings calls or issue press releases, the hundreds of thousands of small independent retailers collectively account for $3.74 trillion in sales – that’s a little over half (51.5%) of all retail sales. What’s missing in most of the conversations is an understanding of how adaptable and resilient these specialty retailers have become. They’re not operating on nostalgia; they’re making smart decisions about inventory and customer experience. The difference is, they don’t get written about in earnings calls or shareholder letters. But that doesn’t mean they aren’t growing, or that they are any less important. If anything, they show us that retail is shifting back to something more human and personal.

DJ: How are independent specialty retailers responding differently to the pressures that are sinking larger retail chains?

2. Stern: Large retail chains often struggle under their own weight. They’re built on relatively low margins but benefit from scale, which works until the market shifts and they need to adjust their strategy quickly. That’s where specialty retailers have a real advantage. They can adapt without restructuring complex global supply chains. When costs go up due to shipping issues and tariffs put pressure on margins or consumer habits change, they can adjust their product mix, change how they staff or introduce new services in almost real time. That kind of responsiveness helps them adjust after a few down weeks before it stretches into a few bad quarters.

There’s also a different level of ownership and insight at play. Most specialty retailers are run by owner-operators: people who are actually on the floor, talking to customers, watching what inventory moves and making the purchasing decisions for how they’ll stock their own shop. This gives them a clear view of what their core customer base wants. They certainly aren’t immune to those same economic pressures, but they’re better at staying close to the signal and cutting through the noise.

For example, the small local pet supply shops that we serve have been on the cutting edge of changing pet food habits for decades. People who care about what they feed their pets know that their local shops aren’t beholden to the giant mega-producers of dog and cat food, and were the first places to start offering things like low-grain foods years ago, or the fresh foods you see today. Notably, a lot of these higher-end pet products are made locally or regionally, and not affected by the supply chain shocks from things like international tariffs.

More broadly, the big-box retailers tend to compete on price and large inventories. These are both under pressure right now from global supply shocks. Local retailers gain loyal followers with in-store expertise and hands-on buying experiences. For instance:

• Local sewing and quilting shops have in-store classes to teach beginners and build community among customers.
• Framing stores offer the ability to consult with a craftsman who can recommend frames, mats, and show physical samples in the store.
• Family-run jewelry shops can customize or combine pieces to give you exactly the jewelry you like and can afford.
• Local thrift stores offer unique browsing experiences that change nearly every day.

DJ: You’ve said before that small shops aren’t just surviving, they’re adapting faster than anyone gives them credit for. Can you share some examples of that?

3. Stern: One thing that the big ecommerce and even big box stores have done is to raise the bar for customer expectations around technology. We really saw this with COVID, when so-called omnichannel services became totally expected; that is, customers wanted to be able to go online, see a store’s inventory, purchase that product and pick it up in-store, curbside, or even have it delivered. Beyond that, the ability to communicate with the store by text message, monitor a delivery in real time, or track things like repair status easily have become expected.

In addition to technology advances, small shops are enabling more and more financial choices for customers, with things like buy now / pay later, rewards programs, and alternative payments like ApplePay and AndroidPay.

Because small retailers aren’t bogged down with huge enterprise software and payments systems consisting of millions of dollars of interconnected solutions built up over decades, they can adopt these new features really quickly.

DJ: What structural advantages do local and niche retailers have that national brands can’t easily replicate? How is technology helping small shops level the playing field?

4. Stern: Local retailers have proximity, both literally and in how they operate. They know their customers personally and adjust their decisions based on real-time feedback, not quarterly reports. Big-box stores try to simulate that kind of closeness through data or regional campaigns, but it rarely feels the same. A neighborhood shop doesn’t need to engineer trust; it happens naturally through personalized, tailored customer service.

Consider the example of a music store that knows the local school districts and can help your kids pick out the right band instrument. They aren’t operating based on a database of clarinet sales; they have personal relationships with the band teachers at the local schools. Or a bait & tackle shop that lets you put your morning’s bait on a house account if you don’t have your wallet on the way to the lake. This kind of local trust is impossible to replicate by national brands.

Technology has also made it easier than ever for these businesses to use “enterprise-grade” solutions and processes to modernize their stores without losing that personal connection. A well-run shop today can use tools that handle inventory, payments or marketing with the same sophistication as the national chains without being overloaded with unnecessary features. The difference is, they tend to use the tools not to reduce headcount, but to free up their expert staff to spend more time with customers on the store floor. They don’t need to compete with the big box stores on scale – they just need to be better equipped to do what they already do well.

DJ: What’s your message to investors or policymakers who’ve traditionally underestimated this segment?

5. Stern: I’d say this: if you are only listening to the loudest voices (that is, the biggest companies) in the retail space, you are missing half the market. Not only do small, independent retailers represent trillions of dollars of sales, they are the hearts and souls of our communities, the kinds of shops that make our main streets walkable and give our communities texture and flavor.

Beyond the total addressable market, specialty retail represents stability and community resilience in a way that national chains often don’t tap into. These businesses are embedded in local economies. When a big-box chain closes, the economic hole it leaves can take years to fill. Specialty retailers can fill those gaps very quickly and effectively.

DJ: And finally, if nothing else, what should readers take away from our conversation?

Stern: The retail landscape has seen two major paradigm shifts in the last 50 years. The first was the introduction of the “big box” stores, which challenged small local retailers with a low-service, low-price model. From that, retailers learned that if they did not offer local expertise and high service levels, they did not have the right to exist.

6. The second shift was the dotcom boom and introduction of ecommerce-only players. This disruption hit those big box retailers the hardest, undercutting their low prices and surpassing their broad selections. Everything big box stores were known for was undercut by Amazon and the big ecommerce giants that have proven to be better at delivering on price and convenience. With the added efficiencies of next-day and same-day delivery, the need for those big-box stores is increasingly being questioned.

Through it all, the small independent shops across America have continued to thrive with a combination of carefully curated local goods, in-store expertise and high levels of service which have proven an incredibly durable segment of the consumer retail sector. These are the shops that will persist through all and continue to serve their communities – no matter what comes next.

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