Mom-and-Pop: Meaning and Examples for Businesses and Investors

What Is a Mom-and-Pop Establishment?

"Mom-and-pop" is a colloquial term used to describe a small, family-owned, or independent business. Mom-and-pop stores are often operations that struggle to compete with more substantial establishments, such as big-box retailers, who generally boast more buying power than smaller players. In the last few years, "shop local" and "shop small" have been used as slogans in marketing campaigns. The term "mom-and-pop" also refers to inexperienced investors who casually play the market.

Understanding Mom-and-Pop Entities

Mom-and-pop stores were historically used to describe local family owned and operated general stores or drugstores. Today, mom-and-pop establishments are synonymous with various different types of businesses, including restaurants, bookstores, automotive repair shops, and insurance agencies.

In many ways, mom-and-pop businesses stand at a steep disadvantage to large corporations, e-commerce companies, technology platforms, and franchise businesses, who enjoy bigger economies of scale, greater access to capital for investments, larger advertising budgets, higher brand awareness, greater access to talent pools for hiring, etc.

This collectively gives larger players a competitive edge over mom-and-pop businesses, who frequently, lose ground and find themselves forced out of business in response.

Fortunately, there are signs of hope for mom-and-pop stores. More than ever before, consumers are demanding more personalized products and services. When shoppers ask, "Where can I find a mom-and-pop shop near me?" they don't need to look further than the Internet. Using technology, like social media, small businesses can expand their target audience and broaden their geographical reach.

Mom-and-pop shops also benefit from a phenomenon known as "Small Business Saturday," which is a recent American tradition of shopping locally on the Saturday following Thanksgiving. This shopping holiday is a logical answer to Black Friday, where large retailers offer enticing discounts to consumers. Mom-and-pop business owners tend to have a vested interest in the community, its citizens, and the local economy. Consequently, they offer highly interactive and personalized services that large corporations cannot replicate. For this reason, mom-and-pop stores often win increased brand loyalty among consumers.

Mom-and-Pop Investors vs. Mom-and-Pop Establishments

"Mom-and-pop" also refers to inexperienced investors who minimally invest in the stock market. Despite limited capital commitments, mom-and-pop investors often count on significant returns on their trades, in order to supplement their income.

But many mom-and-pop investors are unfamiliar with market research and react impulsively to market changes and fluctuations, by rashly dumping their positions, rather than riding out rough patches.

Some mom-and-pop investors combat their inexperience by hiring brokers to facilitate trades, or by using one of the many online trading platforms to facilitate their investments.