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

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.

Recommended articles