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Small businesses play a vital role in any commercial economy. According to the U.S. Chamber of Commerce, there are approximately 31.7 million active small businesses in the United States, which make up 99.9% of all registered companies. Although large retailers are in control of the retail sector in the country, the 100 biggest chain stores generated a total of $2.6 trillion in sales in 2022, as reported by the National Retail Federation’s study.
What makes independent stores so important? Not only do you help your city’s ability to finance public services, but you also help an individual pursue their dreams. Studies indicate that when you spend money at local businesses, nearly half (48%) of that expenditure is reinvested into the local economy, which is significantly higher than the 13% reinvestment rate for major chains, as reported by the American Independent Business Alliance.
So which of America’s cities have the highest proportion of independent stores, and in which locations do chain brands dominate the commercial landscape? Merchant Machine has analyzed where more than 20,000 independent stores and chain stores are located across the U.S. to find out.
In America, Detroit has the highest percentage (81.5%) of independent stores.
The state of Michigan has the highest percentage (73.5%) of independent stores in the United States.
In America, Columbia, Maryland has the highest percentage of chain stores occupying its retail industry at 73%.
Out of the 20 largest cities in the United States, Los Angeles, California has the highest percentage (69.4%) of independent stores. On the other hand, San Jose, California has the highest percentage (57.4%) of chain stores.
The Split of Chain and Independent Stores by U.S. State
Which regions in America have a thriving independent store culture? In Michigan, small businesses make up almost 73.5% of retail stores. The state has a strong preference for independent stores, often referred to as ‘mom-and-pop’ shops, which include family-owned and other independent retailers.
Governor Gretchen Whitmer is a strong supporter of small businesses and has endorsed the ‘Support Local’ campaign to encourage people to shop at independent retailers in Michigan. According to a 2022 study conducted by the Michigan Retailers Association, if people were to shift 10% of their purchases from big out-of-state businesses to local stores, it could result in the creation of 16,000 jobs and an addition of $1.2 billion to Michigan’s economy.
Hawaii has America’s second-highest percentage of independent retailers, with 69.1% of stores owned by small businesses.
The Americans Cities with the Highest Percentage of Independent Stores
Detroit has the highest concentration of independent retail in the United States, with 81% of stores having less than three chains.
For many years, Detroit has faced challenges in attracting large retail chains, particularly in the grocery sector. This issue has been noted in reports dating back to 2009. Despite creating a larger market for independent retail, it has also led to city-wide inflation on everyday items, putting further pressure on family-owned grocers.
Detroit’s independent stores were badly affected by the lack of customers during the Covid-19 pandemic, as major companies such as Ford and General Motors closed their offices. The Chamber of Commerce in the city has an optimistic outlook that by 2023, the footfall will return and bring back independent retail to the city.
Miami is another major American city with a substantial independent retail scene.
The American Cities with the Highest Percentage of Chain Stores
The biggest chain retail brands in America are well known. Atop the Fortune 500 rankings in 2022, Walmart is still the king of the industry. Despite being primarily an e-commerce company, Amazon has almost 600 stores in the United States, primarily Whole Foods supermarkets. With more than 17,000 stores nationwide, Dollar General is the country’s largest retailer and a staple of rural America.
The Spit of Independent and Chain Stores in America’s 20 Biggest Cities
From New York’s 5th Avenue to Rodeo Drive in Los Angeles, some of America’s largest cities are a consumer’s paradise. Such is their popularity that both places (along with Miami) are noted among the Top 30 Global Retail Cities index produced by Savills. Independent stores, however, are the majority in 18 of the 20 largest population centers in the U.S., with Los Angeles (69.4%) having the highest proportion.
San Francisco also encourages independent retail, with 67.9% of businesses in the city belonging to small company owners.
Methodology
To find out which U.S. states and cities have the highest percentage of independent businesses, the Merchant Machine team studied Google Maps data for 175 American cities. They then pulled a sample of 20 thousand retail stores across clothing, shoes, hardware, and department store groups. To estimate the split of chain and independent stores by state and city, the team determined chain stores as those with more than three establishments.
To identify the location of each store, the Merchant Machine team got sets of geographic coordinates within the boundaries of each of the American cities. Then they utilized Google Maps API to obtain businesses that were laid out within a radius of each of these coordinates. The radius used for each metropolis was variable and depended on the area and density of the population of the city. Besides, they screened stores without buyer reviews or permanently closed.
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