Independent Retailers: Definition + Examples

With online shopping and one-day delivery, it seems like customers have endless options for retail purchases.

But did you know that most retailers in the U.S. are independent? These entrepreneurs and "mom-and-pop" shops make our local economies thrive. They offer unique products, a personalized shopping experience, and a sense of community that big brands can't match.

Owning your own business is a dream come true for many. So, what are independent retailers? And how do you become one?

In this post, we'll discuss what it means to be an independent retailer, the pros and cons, and why these businesses are vital.

The U.S. Small Business Authority (SBA) categorizes small businesses based on their employees or annual profit. Independent retailers can qualify based on either, and additional guidelines may exist in your state or municipality.

In short, independent retailers are privately owned and operate without a bigger corporation's support. These businesses aren't necessarily "small," but most are managed by one or a few people. Some may have multiple locations, typically regionally or locally.

Independent retailers represent the majority of retailers in the United States. According to a 2024 report, they account for more than 50% of all retailers in nearly all U.S. states.

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While you may feel like all you see are big chains everywhere you go, that's not quite the case. Smaller businesses and independent stores make up many of our shopping options, which is excellent news for budding small business owners.

Corporate vs. Franchise vs. Independent Retailer

Corporations differ vastly from independent retailers. Corporations hire managers who run operations but are responsible for reporting to the corporate headquarters. The corporation owns the profits of that store, whereas an independent retailer owns everything.

A franchise is when an individual purchases the rights to open a store under a corporate name. They operate this store independently, with exclusive access to the goods sold by the corporation. The franchise owner is responsible for deciding what to stock, how much to carry, and the budget and operations of the store. Like an independent retailer, they also own their store's profit.

We mentioned this earlier, but it's important to remember that independent retailers aren't always small. For example, Kylie Cosmetics - a company valued at $1.2 billion and featured in several retail stores - was technically an independent retailer before selling to Coty in 2019.

A celebrity-owned company is not an average example of an independent retailer. However, it's important to note that the technical differences between independent retailers, franchises, and corporations can sometimes be a little confusing.

What does an independent retailer do?

Like corporations, independent retailers buy goods from manufacturers or wholesalers and resell them to customers at a higher price. Some independent retailers sell goods that they make, but this isn't the norm for most full-time independent retailers.

As an independent retailer, you:

• Research and purchase products to stock in your shop.
• Interact with customers.
• Track inventory and transactions.
• Oversee your staff.
• Manage operations like hiring, accounting, and payroll.
• Work on marketing, whether traditional or digital.

Oversee your online presence, including your website, SEO, social media, and reviews. Corporations and franchises break up these operational tasks into departments. Unlike independent retailers, they have multiple teams that they can delegate to. Being independent comes with freedom but also more responsibility. However, independent retailers have a big impact on the economy and their communities. This video explains why:

Independent Retailer Examples

There are probably several independent retailers in your area. Here are some examples you should look for:

1. Clothing Boutiques

Small clothing retailers often stock specialty items and clothes that are not mass-produced. Clothing boutiques offer a way to get stylish, higher-quality clothing that isn't the same as everyone else's. Clothes in boutiques may still be mass-produced, but the buyer wants a unique style to match their brand and shoppers.

2. Record Stores

Back in the heyday of music stores, most were corporate-owned - like FYE.

Now, you'll find locally-owned record stores operating independently, especially since vinyl started seeing a massive resurgence in popularity. Record stores will even sell memorabilia and collectibles in addition to music. They also purchase products from a used marketplace, making them a unique example of independent retailers.

3. Coffee Shops

Small, privately owned coffee shops are another example of independent retailers. These stores sell coffee but may also stock goods ranging from pre-packaged beans to mugs to handmade coasters. They often promote on social media using eye-catching, high-quality visuals. Here's an example:

4. Beauty Stores

We've heard of chains like Ulta and Sephora, but plenty of independent beauty retailers also exist. They stock specialty items along with your standard drugstore products. These stores often pride themselves on personalized service and keep beauty experts on staff who know the products and their customer base.

5. Grocery Stores

Believe it or not, major grocery store chains are relatively new to our economy. Previously, people went to separate independent retailers to buy their food, such as a produce stand, a butcher, a cheese shop, a bakery, etc.

These businesses still exist and are great options for specialty foods. Smaller grocery stores may have a specific brand positioning for their products, like an Italian grocery store or a regionally-focused market that stocks food from local farms.

Here's an example of an Italian-themed grocery store that's independently owned.

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With so many independent retailers nationwide, there has to be a reason people are willing to jump into this business venture, right?

Independent Retailer Advantages & Disadvantages

Let's review the advantages and disadvantages of being an independent retailer below.

Independent Retailer Advantages

We'll start with the pros. Here's what's great about owning your own business.

Autonomy & Flexibility

As an independent retailer, you control all aspects of your business. You choose your hours, what you stock, and your prices. It's easier to adapt to customers' needs since you don't have to go up a management chain and have daily interaction with them. It also allows you to showcase lesser-known brands, like fellow independent retailers in your community.

Community Focus

Independent retailers are integral to their communities. They sell goods that people love, and the community supports them by buying locally instead of online or with a big brand.

In recent years, there has been a noticeable push toward supporting independent retailers, including initiatives like National Independent Retailer Month and Small Business Saturday.

Powering Local Economies

Some research shows that more than 50% of purchases from local independent businesses is recirculated to the community. Keeping these dollars in the local economy helps keep communities healthy, and your friends and neighbors can continue supporting themselves with the jobs created by independent retailers. In fact, small businesses are responsible for almost two-thirds of new jobs created from 1995-2021.

Personalized Experiences

You have lots of decision-making power, including the type of experience you provide your customers. Being an independent retailer allows you to provide a unique customer experience that differentiates your brand from larger retailers and brings your community vision to life.

Independent Retailer Disadvantages

Now, let's talk about the obstacles you'll need to overcome as an independent retailer.

Time Investment

When it's all on you, it's all on you. You're responsible for every part of your store. You're the manager, the salesperson, the clerk, and sometimes the janitor. That can be a huge time investment, and it's where small business software can mitigate some of these concerns. Use tools like a shared inbox, marketing automation, and webchat to get some time back in your day-to-day workflow.

Competition

You may have more power over how to run your business, but bigger marketplaces cater to big companies. As an independent retailer, you have less influence and bargaining power with manufacturers and wholesalers and might be more susceptible to changes in the market on your tighter budget.

Financial Risk

Without corporate backing, money-losing mistakes could significantly harm your business. If you have a few bad months, you'll have fewer resources to depend on for marketing, sales, purchasing, and covering your losses.

Is Being an Independent Retailer Right For You?

Being an independent retailer isn't for everyone. It takes strong business management skills, a true passion for your work, and some chutzpah, too. Independent retailers do the bulk of the work, which means lots to do behind the scenes - but, luckily, there are tools available, like software made for small businesses, that can help you get some of that time back.

The bottom line? It's not for everyone, but you'll love it if it's right for you.

Our advice? Know your community, know your market, and have a plan. No matter your industry, you need to go into it informed, prepared, and ready with the tools you need to succeed.

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