How the 'Shop Local' Message Is Helping San Jose Businesses Cling On

In September, Be'Anka Ashaolu and her sister Jeronica Macey opened Nirvana Soul Coffee, a small, colorful coffee shop in downtown San Jose centered around the concept of self-care.

Ashaolu says she was nervous to open a new business in the middle of a pandemic, but was pleasantly overwhelmed by the initial interest.

"It was emotional, we got so much support. We had lines down the block," Ashaolu said.

Now, four months later, those lines have mostly petered out, Ashaolu says, although the cafe still draws crowds sometimes on weekends.

"We're also getting better [at serving customers] ... which is nice," she said.

In the absence of steady in-store traffic, Ashaolu and Macey have leaned heavily on their online store where customers can purchase coffee beans and gift cards even while the physical cafe is closed. And her small business isn't alone in relying on an online platform during the pandemic.

A survey conducted by the National Retail Federation found 42% of shoppers intended to shop solely online due to the COVID-19 pandemic. Ashaolu built a robust online store so her customers could shop safely from home without having to check the latest restrictions from the county or city level.

"And I think there's also a faction of people who understand that businesses also need to survive this," Ashaolu said. "COVID is completely awful and there are people suffering health-wise, but businesses are suffering as well. So it's how you reconcile those two things."

Au Nguyen, the owner of San Jose clothing boutique AuLaLa Design, has also noticed her customers going out of their way to support her small business.

"People who actually shop here, they don't need to because we're not an essential business," Nguyen said. "So for them to spend their money and open their wallets in these hard times — they either love our brand or they are truly, actively trying to support us."

Nguyen opened her shop in San Jose's San Pedro Square in July. Her boutique is part of the Moment program, a small-business incubator that provides subsidized rent in retrofitted garage spaces for nascent local businesses. She has been relying on San Pedro Square's foot traffic as people dine outdoors and go for walks on the street, which is sectioned off from cars to allow safe pedestrian traffic.

But the strict stay-at-home restrictions that Santa Clara County adopted in early December have decimated foot traffic.

"Foot traffic has declined dramatically. It's almost like a ghost town on the weekdays, even on the weekends," said Nguyen, who has relied on her online store to drive holiday sales. In any other year, Nguyen might have counted on Black Friday sales to get her through the winter. Now, she's holding out until the lockdown is lifted and people can visit her shop in person again.

"I opened right after the first lockdown was lifted and a lot of people came out. They were just so confined for a while and that gave them a chance to get out and do something," she said. "We were thriving during that time."

Nguyen believes her online sales will keep her shop alive until at least early next year, when she expects the lockdown to lift and AuLaLa to have a boom in business again.

Scott Knies, executive director of the San Jose Downtown Association, is nervous about how businesses like Nguyen's will survive until Jan. 4, the last day of the Bay Area's lockdown order.

"It's harder than you think to go into hibernation and shut a business down completely," Knies said. "Who knows on Jan. 5 what's going to happen [when businesses can open again]? There's exhaustion with a lot of these small businesses and tremendous vulnerability in this economic crisis."

Before the pandemic hit, employees from large tech companies in San Jose (think Adobe and Sage Intacct) would eat and shop in the city's downtown. Now that these companies have moved to a remote-work model, Knies is unsure of when people will return to downtown San Jose and patronize the local businesses.

"We had started to see the light at the end of the tunnel and now that tunnel has been shifted back on us yet again," Knies said. "And there are some businesses that aren't going to make it."

The next round of federal aid provided by the $900 billion stimulus package Congress approved in December, which includes $285 billion for additional Paycheck Protection Program loans for small businesses, is too little coming too late, Knies said.

In the Bay Area, a Yelp survey found that San Francisco and San Jose were among the metro areas with the highest permanent closure rates for businesses. Roughly 20 businesses per 1,000 in the state have temporarily or permanently closed their doors since March.

San Jose officials have launched a campaign called #ShopLocalSJ to encourage residents to shop at small businesses during the holiday season. And in early December, Santa Clara County instituted a cap on commissions and fees charged by app-based delivery services, like Uber Eats and DoorDash. Through June 2021, those companies — which typically charge up to 30% commission — can only take 15% of the value of each order.

Knies still feels that it's not enough to keep small businesses from falling by the wayside.

"We would sure like to see our public support have the same sense of urgency that our businesses have," Knies said. "What's going on with this country that we can't acknowledge how the heart and soul of every community in this nation is reflected in its small businesses?"