LA’s small businesses are recovering so slowly, it’s troubling economists

More people are returning to stores, clubs and bars after some 16 months of the pandemic, but LA’s economic growth is still fragile and happening unevenly, and small businesses are getting shafted. That’s according to economists with the Los Angeles County Economic Development Corporation (LAEDC).

“Our small business revenues in California are still down about 30 to 40%, below pre-pandemic levels in recent months and it's troubling,” says LAEDC CEO Bill Allen. That’s despite consumer spending now back to near pre-pandemic levels.

He says the small business recovery is more modest than the economy as a whole because consumers changed their spending behaviors during the pandemic.

“We started shopping through e-commerce platforms like Amazon or Walmart.com because our local stores were closed. Now that they're reopening, we haven't yet shifted our purchasing patterns back to the pre-existing balance we had.”

That also means certain small businesses — such as ones focusing on health/beauty and toys — are faring worse than others with e-commerce alternatives.

“Those businesses are a great risk, and we've got to get more of them connected digitally to their consumers. It turned out a lot of those businesses really relied on walk-up traffic — particularly in our lower income communities throughout Los Angeles County.”

Allen thinks there is an opportunity for small businesses to turn around if they adapt.

“We saw many of our restaurants adapt to delivering food products. We saw many of them packaging items that were almost like groceries that could be cooked at home. I think all of our businesses have got to go through that reinvention.”

But it’s not all on the businesses themselves. Consumers can help by changing their spending patterns.

“We now have to be conscious if we're serious about supporting our small businesses, particularly the majority of them here in LA that are owned by women and people of color ... They add richness and texture to the fabric of our communities.”

Allen also believes the surging COVID numbers in LA County will affect the progress of LA County’s businesses. “It will slow the economic recovery to the extent that people feel unsafe or insecure being back out in the marketplace,” he says.