Small businesses selling generic items are just not capable of excellence for the same reason that I would not be a competent doctor, lawyer, and software engineer compared to people who did just one of those things.

I knew of a small town grocery store where my grandparents used to have a vacation property. They got a delivery of food once a week, so anything fresh had deteriorated halfway through the week. Technicians needed to be booked weeks in advance to fix things like fridges as it was several hours outside the city, so for a month they didn't have space for cheese. They couldn't buy anything that had a large minimum order and couldn't get bulk prices, so it was expensive. Locals didn't shop there was it was cheaper to burn half a tank of gas. They get hit the hardest during supply chain challenges as their understanding of logistics is to place an order and hope it shows up.

They can exist for niche food products, but selling milk, grapes, and cereal? No, as they will dramatically underperform a business that specializes in dealing with those.