Will this damage small online retailers?

You mean another amazon?
Another ebay?
Another NOTHS?
Another Etsy?

You get the picture?

Sellers can factor threats into their business model. The sky does not usually fall.

Perhaps those looking beyond the cheapest will still find the quality goods and great service. Rather than the tightest margin / cheapest / selling below cost / cutting corners scammers.

This does potentially look painful for local retailers who want to hit the wider market, so you can look at it in two ways...
1, Adress your local market exceptionally well and build a local brand and following, people who don't buy on price but on local convenience.
2, Get a plan in place and think like a national player, this will need deeper pockets of course, but don't forget part 1 along the way!

To make you feel a little better, there is a real possibility that some of these "offerings" from Google will get taken away from them as there is now some big US legal action happening, but even if that happens, someone bigger will fill the gaps as we all know there is something on the cards in the area.

UKSBD said:

Great for the shopper but how are smaller retailers going to be able to compete when this rolls out to the UK and it's so easy to compare the prices of the products they sell?

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Not everyone buys on price alone and I also wouldn't be surprised if people are not becoming blind to everything that Google are stuffing above the natural results. I am increasingly going direct to a handful of choice merchants when looking to buy stuff these days.

Local retailers have a lot of advantages, whether they actually use them is another matter though.

I don't think I've ever bought anything directly that Google has shown as Shopping/ads for products.

Opinion87 said:

I don't think I've ever bought anything directly that Google has shown as Shopping/ads for products.

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Can be useful for finding niche retailers though.

In all honesty, this will be a mixed bag, as the Google Shopping results generally are. There are also good price comparison and tracking sites now, but lots of us don't shop that way.

If you know the product and search for ABCbrand and 123model then the Shopping results are pretty good. As soon as your search is more vague the results are often very poor. As are the local results, as very few retailers are actually good at showing local stock levels for sku level deals etc.

This is also US only at present, plus Google have been trialling a full shop solution on US Google Shopping for some time, where you stay on Google and get it delivered through Google. Thankfully this has met with limited success. This is partly due to poor retailer data setup and shipping options being just too messy. But, it also partly relied on retailers going down the AMP route, which hasn't had great take up, as it only helped Google make money, to the detriment of individual retailers websites...

The reality is that as @Mr D says, local, national and international retailers have to adapt quickly to survive. It's a similar situation that's been playing out since the start of online retail, or the advent of click and collect, eBay, Amazon etc. If you don't keep up and promote your business in the way customers are looking for products/services, then you will be left behind...

The complexity of needing a website feed, Google Merchant Centre setup and then setting up and running successful Google Shopping campaigns is beyond many small online retailers. It shouldn't be, as you can run efficient local campaigns very cost effectively, as even some large retailers don't do it well. It's all about product data and negative keywords, as with a bit of research and testing you can stop your products showing for irrelevant searches and only show up for real buying intent type queries.

We now use Amazon and ebay to find suppliers, then see if they're offering the same (or similar) deals through their own website and buy direct from them. That way, they get to keep more of the profits. However I do agree that Google etc are now becoming almost useless for finding individual sites, you have to go to about page 5 before you find any independents. And so many people (young and old) just use eBay and Amazon and their two ports of call. They never shop around and never price compare (other than between the two).