Small retailers show optimism, but concerns remain
A new survey of small U.S. retailers shows they have a generally positive business outlook but are worried about some key issues.
The 2026 "Voice of the Retail Industry" survey from retail POS and management platform provider Toast reveals that 94% of 340 operators of retailers with fewer than 16 U.S. stores rated their business health good or excellent. More than eight-in-10 (83%) are optimistic about keeping their doors open over the next year (up 6% from 78% in 2025) and nearly three in four reported increases in both revenue and profit over the past year.
Two-in-three (66%) respondents say they are likely to open a new location in 2027, up 5% from 63% who planned to open a new location in the next year in 2025.
Small retailers engage with AI
Artificial intelligence is generally popular with respondents. Almost nine in 10 (88%) believe AI will help them be more efficient at work, up 6% from 83% a year earlier. Eighty-eight percent also trust AI with their business needs: up 5% from 85% year over year.
[READ MORE: Survey: Small businesses cite cost and time savings as top AI benefits]
Interestingly, the percentage of respondents who feel comfortable using AI (89%) slightly dropped from 90% in 2025. But 90% plan to use AI more in the future, a 7% increase from 84% a year earlier. More than nine in 10 (92%) say AI tools offer great value for the money, up 8% from 85% the prior year.
Nine-in-10 respondents are actively experimenting with AI, including 42% doing it through vendors but not on their own, as well as 20% on their own but not through vendors and 28% experimenting both on their own and through vendors.
When asked where they expected AI to help, respondents cited decision making (42%), staff productivity (40%), marketing performance (39%), customer experience (37%) and sales & revenue (37%) as top priorities. And for nearly all issues, respondents largely expressed a desire to have humans oversee AI-generated work.
Pain points
Respondents listed inflation among their top concerns, along with inventory management and deliveries. Roughly the same percentage of operators chose inflation as a top three pain point in 2026 as 2025, which Toast says indicates the industry has been dealing with that pressure for some time.
Top business goals
Respondents were asked to name their top three business goals for the year. Leading answers included:
- Improve profitability: 32%.
- Simplify operations: 31%.
- Improve employee productivity: 27%.
- Start using new tech: 25%.
- Increase same-store revenue: 24%.
- Increase customer demand: 24%.
- Increase customer checkout throughput: 21%.
- Inventory management: 21%.
- Improve employee retention: 20%.
- Managing third-party delivery: 16%.
- Inflation: 16%.
- Employee scheduling: 15%.
- Marketing: 15%.
- Increase line speed: 15%.
- Sourcing and hiring employees: 14%.
Responses to potential cost of goods increases
Respondents were asked what steps they would take if the cost of good srises over the next 12 months:
- Adjust the number of suppliers:33%.
- Increase prices on products: 32%.
- Conduct product-level profitability analysis: 30%.
- Negotiate with suppliers: 29%.
- Start tracking key products more closely: 29%.
- Tightly manage inventory (or carry leaner inventory): 28%.
- Reduce hours of operation: 27%.
- Add additional service fees or charges: 24%.
Demand generation
Top demand generation tools used by respondents include:
- Social media marketing (35%).
- Online advertising: 34%.
- Improving speed of service: 34%.
- Loyalty or rewards programs: 31%.
- Advertising: 30%.
Technology investment
Three-quarters of respondents plan to increase technology spending in the next 12 months (up 17% from 64%). Leading solutions they plan to invest in include:
- Barcode scanners: 56%.
- Accounting software: 55%.
- Electronic shelf labels: 46%.
- Order ready boards: 46%.
- Automated invoices: 48%.
- EBT/SNAP payments: 41%.
- Self-checkout: 36%.
The fastest-growing tools are electronic shelf labels (up 31% year over year) and order-ready boards (up 24%).
Toast conducted a blind survey of operators and decision-makers with fewer than 16 locations in the U.S. and included both Toast and non-Toast customers. Respondents were not informed that Toast was conducting the study.
