For at least a couple of months now Google has been giving a huge boost in map pack ranking for businesses that are geographically closest to the user who is searching. If you are a business that checks its own ranking regularly, you may not have noticed this, because obviously you are very close to yourself. In fact you probably have an unrealistically positive view of your local rankings.
I noticed that all of a sudden there were some very weak listings ranking well over those of my clients, who had typically dominated in those local searches. Using Adwords Ad Preview Tool is a good way to check rank as if you were a searcher in that area .Google Chrome Dev Tools has a function that is supposed to override actual location (Console > Sensors) but I haven't been able to get consistent results with it. Since this boost to actual user proximity to business, however, the ad preview location settings are not granular enough for usable results. If you enter in a city, the city's centroid is used as the user location.
To test this out I searched for the same keyword from a city just north, and one just south of my target city. For the most part the results are consistent with their proximity to the search location. The northern search (Pleasant Hill) grabbed 2 out of 3 of the most northerly businesses.
Searching from the city adjacent to the south gave results of businesses in the south of the city.
The map below shows the locations of the businesses ranking in the map pack. Of course other factors still come in to play, allowing the strongest listing to rank in both searches.
What this means to the small business is that search visits are going to be split up among more businesses, with each getting less local map traffic. Where you used to be able to grab most of the geo search traffic in a given city with a strong listing, now you will have to share that traffic with weak listings for businesses that are closer to the searcher.
What benefit does this have to the searcher? I'd say that serving weak listings to a searcher does not benefit him/her at all. A strong, trusted listing is a quality listing. A crappy, untrusted listing is a dangerous invitation to scams and spams. So why is Google doing this to their local listings? Money of course.
Google has been testing sponsored listings in the map packs of certain vertical searches for some time now, and it appears they are ramping up that effort to take advantage of the havoc they are reigning on local businesses. Want to rank for keyword throughout your city, and not just for people who are a couple of blocks away? Buy an Adwords Ad!