This study surveys small retail pharmacies to examine the relationship between managers' perceptions of local market environments, their stated assortment policies, and their reported performance levels for a large product category. Managers report wider assortments when market diversity and market munificence are high. In turn, wider assortments have a positive effect on reported relative category sales and stock. In addition, market uncertainty has a direct negative effect on reported margins. This study controls for both store space as well as the potential direct performance effects of the local market environment faced by small retailers.