For Small Businesses, Looting Made an Already Difficult Situation Nearly Impossible

They were already struggling after being closed for months because of Covid-19

store in Philadelphia after the looting
A store in Philadelphia in the aftermath of looting. Getty Images
Headshot of Diana Pearl

Key insight:

For the some 30 million independent businesses across the United States, the stay-at-home orders that went into place in the middle of March brought challenges they had never seen. And in recent weeks, many restaurants and retailers found themselves facing another crisis: looting and damage to their storefronts.

The looting occurred in cities across the country amid largely peaceful protests in the wake of the police-involved killing of George Floyd. It was at its worst in the early days of June, and also affected major brands like Zara and Macy’s, both of which saw stores looted in New York, and Target, whose location in Minneapolis may have been specifically targeted.

And while looting—particularly on the heels of a pandemic—is a storm to weather for any brand, larger national or international retailers will likely find smoother sailing thanks to deeper pockets and more expansive insurance policies.

“There’s no question that small businesses are worse off,” said Sucharita Kodali, an analyst at Forrester. “Small businesses are less likely to have generous insurance; they may not even have insurance. They don’t have the profits from other stores that could offset the costs that they may have to incur, or they may not get enough money to rebuild.”

For many retailers, money is scarcer than ever in the present moment. Without storefronts open, many businesses suddenly lost their main source of cash flow. Though ecommerce’s popularity is steadily growing, brick-and-mortar retail still accounts for the vast majority of sales—11.1% in 2019, according to Statista. Thanks to ecommerce, services such as curbside pickup, and for restaurants, takeout and delivery, allowed for sustaining some level of business.

The inside of a Starbucks in New York City

But these were a mild balm for a gaping wound. In some states, curbside retail wasn’t an option at all until very recently—New York City’s nonessential retailers were only allowed to begin offering curbside pickup on Monday. For others, it simply wasn’t compatible with how they conduct business. Lana Negrete Fernandez, whose family owns the Santa Monica Music Center music store and studio in Santa Monica, Calif., said that for major purchases, like a musical instrument, seeing and feeling the item in question ahead of actually making the purchase is a major part of the shopping experience.

“We can’t say, ‘Oh, you’d like to buy a $3,000 saxophone? Well, look at it on the internet and we’ll toss it in your car from the curb,'” she said.

The timing of these looting and vandalism incidents compounded their negative effects. Many of the affected businesses had been shut down for months due to the coronavirus pandemic, leading to months of revenue that had severely declined—or in some cases, completely disappeared.

For Jenn Yeo and her family business, Philadelphia beauty supply store Sun Pay, rebuilding isn’t just a metaphorical proposition but a literal one: The store was looted and then set on fire on May 31, resulting in $650,000 worth of lost product and physical damage. Yeo said that in preparation for reopening, which was set to come just a few days before Sun Pay burned down, her parents had restocked the store. Now, the merchandise as well as the entire physical space has been destroyed. A reopening that was just days away is now months into the future.

A looted store in California

“This outcome has completely set that [reopening] back,” Yeo said. “It definitely made whatever was bad a lot worse.”

Those affected by the looting are forced not only to navigate post-Covid-19 regulations, but also figure out how to handle the insurance claims and other difficulties of repairing the physical damage done, which for many goes further than broken windows and stolen product.

Negrete Fernandez, for example, said damage at the Santa Monica Music Center has not only affected product but how they’re able to conduct business. Cords that helped to power the store’s computer system, which allowed for continual billing to clients even while the actual storefront was closed, were ripped from the wall and will cost at least $18,000 to replace.

If government help does come, it brings with it the problems of deciphering the legalese, and for property damage there are conversations with landlords over monetary responsibility. Filing insurance claims has proved difficult, as initially, carriers fought back on civil unrest as a reason for coverage, Negrete Fernandez said. As she’s spoken with media outlets about that pushback, it’s faded.

Both Yeo and Negrete Fernandez said they viewed the looting as separate from the protests that were occurring in their cities. “These people have nothing to do with the protest,” said Negrete Fernandez. “They were not even at the protest.”

Another cost is the emotional toll to watching the business you built be destroyed. “A lot of people are pretty traumatized,” Yeo said of Philadelphia’s small-business owners. “And I think they’re, quite frankly, scared to open again this early.”

“A large corporation has a lot more resources,” said Helana Natt, the executive director of the Greater New York Chamber of Commerce. “Then you have the smaller retailers, the mom-and-pop shops, [that] really had to reach out to their community.”

What small businesses have lacked in major resources, however, they’ve perhaps made up for (in part) with community support. GoFundMe has become a gathering place for those looking for financial assistance in this time of crisis—a fundraiser for the Santa Monica Music Center has raised nearly $40,000 of an $80,00 goal, while Sun Pay has raised over $28,000 of its $100,000 goal.

Those funds, of course, provide relief, but coming back from this damage—particularly, the damage that Covid-19 caused—will be a lengthier task. And though Negrete Fernandez has felt an outpouring of support from her community, she worries that it will dry up, particularly given the intensity and speed of the 2020 news cycle.

The inside of a store in Philadelphia

“I’m just so worried because people move on fast, as a community and as a world,” she said. “They’re in it for five seconds, and then everybody moves on.”

Indeed, even before the Covid-19 pandemic forced store closures, the landscape for retail—and in particular, small retail businesses—was challenging. Competition from behemoths like Amazon, coupled with factors such as rising rents and the move toward ecommerce, had posed challenges for small storefronts.

“I don’t think people want to see another Starbucks,” said Negrete Fernandez. “People want us to be there.”

But Natt said she doesn’t think the looting will deter businesses from reopening on schedule, at least in New York City. The financial cost of the Covid-19 pandemic means that businesses haven’t had much of a choice.

“They want to be up and running, so they’re not going to stay closed,” Natt said. “We’re resilient.”


@dianapearl_ diana.pearl@adweek.com Diana is the deputy brands editor at Adweek and managing editor of Brandweek.
Publish date: June 11, 2020 https://dev.adweek.com/retail/for-small-businesses-looting-made-an-already-difficult-situation-nearly-impossible/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT
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