Small-cap retailers abound in today’s market and, if chosen wisely, can offer nice long-term options for the savvy investor.  With the fiscal cliff averted and the jobless rate falling at a decent clip, discretionary spending is loosening and small-cap retailers are likely to reap the benefits. Of course investing in small-caps has its risky side. Stocks on the Russell 2000 index of small companies sell for about 20 times 2013 earnings forecasts. But this is where you, as an informed investor make good choices and get compensated for the high risk with higher returns. Following are a few options that may or may not be good choices in your quest for less volatile small-cap investing in the general retail sector.

ALCO Stores Inc. (NASDAQ: ALCS) is a general merchandising retailer operating in the Midwestern portion of the United States. The company operates 217 stores located in 23 states and its merchandise ranges from automotive items to toys and just about everything in-between. The company prides itself on being small town oriented and customer-centric. ALCO has a market cap of $27.59 million and is currently trading at $8.47 per share. Though the company reported a loss in Q3 2012, CEO Richard Wilson noted that it directly tied into on ongoing drought in rural areas across the region. Net sales were up and gross margins showed improvement.

Gordman’s Stores Inc. (NASDAQ: GMAN) is an Omaha based apparel and home décor retailer. The company has a market cap of $232.16 million and shares are currently trading up at $11.93. The company was downgraded today by TheStreet Ratings from hold to sell. GMAN has overwhelmingly underperformed when compared to that of the S&P 500 and also underperformed when compared to the Multiline Retail industry average on whole. Net income has slumped by 15.9 percent compared to the same quarter in 2011, dipping from $4.75 million to $4.00 million. In addition earnings per share were down 16 percent year-over- year. Clearly this is a company with issues that need to be sorted out.

Fred’s Inc. (NASDAQ: FRED) operates 680 discount general merchandise stores and pharmacies primarily in the South. Though sales were somewhat off in December, which was the norm for a number of retailers, analysts and investors are not overly concerned. Fred’s expects   much improved sales in future months aided by increased promotional efforts in specialty drugs and clinical services. The company has launched discount tobacco programs a new Hometown Auto and Hardware program which should help store expansion and boost comparable store sales. The company has a market cap of $480.34 million and is trading at up at $13.14, a nice entry point in a very solid company.