Unable to run 'docker-compose build' on "circleci local execute"

Build Environment
1

This is a docker, docker-compose and django project.

Locally, it works when I run

docker-compose build
docker-compose run --rm app sh -c "python manage.py test"

However, it failed when I run

circleci local execute

The error I get is

docker-compose build

ERROR: Couldn't connect to Docker daemon at http+docker://localhost - is it running?

If it's at a non-standard location, specify the URL with the DOCKER_HOST environment variable.
Error:
Exited with code exit status 1

Here’s the .circleci/config.yml.

version: 2
jobs:
  build:
    docker:
      - image: circleci/python:3.8.5
    working_directory: ~/app
    steps:
      - checkout
      - setup_remote_docker:
          docker_layer_caching: true
      - run:
          command: |
            docker-compose build
      - run:
          command: |
            docker-compose run --rm app sh -c "python manage.py test"

I was using travisci and it just works with the .travis.yml config file below:

language: python
python:
  - "3.8"

services:
  - docker

before_script: pip install docker-compose

script:
  - docker-compose run app sh -c "python manage.py test"

Would appreciate some pointers here. Thank you.