How Digitally Fluent Small Businesses Are Reshaping Main Street

Four years after the pandemic pushed millions of small businesses into emergency digital adoption, a new reality is taking shape across Main Street. The businesses that successfully digitized are increasingly pulling away from those that did not.

Findings in the May 2026 Small Business Week report by PYMNTS Intelligence underscore the widening divergence. Small and medium-sized businesses (SMBs) generating more than $1 million annually reported year-over-year growth exceeding 13%, while businesses earning less than $150,000 annually grew less than 1%. The gap suggests digitization is not simply correlated with stronger performance; it is increasingly intertwined with scale itself.

The implications are profound. America’s small business economy is no longer evolving evenly. It is bifurcating. The pandemic accelerated digitization, and what followed was consolidation of advantage.

On one side are digitally fluent SMBs that invested in omnichannel commerce, digital payments, mobile ordering and operational software. These businesses are growing faster, adapting more easily and showing greater confidence about future expansion. On the other side are smaller merchants still operating with limited digital infrastructure, many of whom are struggling to convert post-pandemic normalization into meaningful growth.

This reality has fundamentally altered the economics of small business competition, which today increasingly depends on owned websites, delivery aggregators, digital wallets, social commerce, platform discovery and more platform-driven operational efficiencies.

The Pandemic Didn’t Just Change Small Business, but Reordered It

Many pandemic narratives assumed businesses would “return to normal,” but instead a new normal has arisen over the past for years. The report found that, increasingly across Main Street, omnichannel became normalized, digital payment expectations hardened and hybrid commerce became baseline infrastructure.

The defining advantages of local businesses were traditionally grounded in their physical proximity, customer familiarity and neighborhood presence. Success often depended on location, foot traffic and reputation within a community. Today, those advantages still matter, but they are no longer sufficient.

Consumers increasingly expect businesses of every size to offer frictionless digital experiences: tap-to-pay checkout, digital wallets, online ordering, delivery integration, real-time inventory visibility and mobile communication. What consumers once viewed as convenience features have become baseline expectations.

A merchant with integrated payments, digital ordering, customer data tools and multiple sales channels is now structurally more resilient than one relying solely on walk-in traffic. Digital capabilities allow businesses to continue selling during disruptions, reach customers beyond geographic constraints and respond more dynamically to changing demand.

One of the most consequential shifts in modern commerce is the extent to which software platforms now influence local business operations. Companies such as Shopify, Square, Toast, DoorDash and PayPal increasingly function as the infrastructure layer beneath small business activity. They facilitate payments, logistics, discovery, customer engagement and financing.

Read the report: Why Main Street’s Digital Survivors Are Pulling Ahead: Four Years of Small Business Data

Digital Resilience Has Replaced Physical Resilience

One of the more overlooked findings in the PYMNTS Intelligence data involves rising business confidence. After all, businesses that feel financially stable and operationally capable are more likely to invest in hiring, technology, marketing and expansion.

Digitally mature SMBs increasingly appear to be entering a reinvestment cycle. Stronger performance supports additional investment in software and customer acquisition, which then reinforces operational efficiency and growth.

A digitally enabled merchant that acquires more customers through omnichannel engagement can generate more revenue, which supports further investment in automation, analytics and marketing. Meanwhile, smaller businesses operating with limited digital capabilities may struggle to generate the margins necessary to modernize at comparable speed.

In this new landscape, software fluency increasingly determines resilience. Operational adaptability matters as much as location. Customer experience extends beyond physical interactions into integrated digital ecosystems.

Most importantly, digital capability is becoming cumulative. That may ultimately prove to be the defining lesson of the post-pandemic small business economy: digitization did not merely help businesses survive disruption. It changed the competitive logic of survival itself.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.