January 12, 2022 | 10 Predictions for 2022 | By: Matthew Wagner, Ph.D., Chief Program Officer, Main Street America |
Making predictions is always a risky proposition. Given the accelerated nature of change brought on by COVID-19, understanding trends in real-time and forecasting the impacts on the work of place management and small business development can be challenging. However, having some idea as to what to keep an eye out for and where to apply some additional focus represents a valuable pursuit given our time limitations and the volume of work inputs. As such, rather than position this purely as a set of predictions, I would suggest this collection of thoughts represent areas for further consideration, investigation, experimentation, and discussion throughout 2022.
From agriculture to manufacturing, as industry sectors mature, the drive to increase productivity and lower labor costs results in the development and infusion of new technology and automation solutions. As a result, employment migrates to other growing sectors such as technology, service, and retail/hospitality industries. This worked fine in an economy with a fundamentally greater labor supply than demand. However, COVID-19 has greatly accelerated workforce shortages, with particular impacts on the retail, restaurant, and hospitality sectors. To drive this point even further, 4.5 million workers left their jobs in November 2021. Restaurants and hotels represented the largest segment of separations. However, they also logged the biggest decline in openings.
UBS is estimating that about 80,000 retail stores, which is 9 percent of total stores, will shut across the country by 2026.
That assumes e-commerce sales rise to represent 27 percent of total retail sales by then, up from 18 percent today. However, technology integration between e-commerce and bricks-and-mortar will offer new formats for in-person shopping, thus shifting some use and function of space to concepts such as “showrooming” whereby stores carry far less inventory. This showrooming model helps retailers that can’t afford to rent out a huge space to accommodate a full store’s worth of inventory. I predict that rather than a full migration to showrooming concepts along our Main Streets, we will begin to see a movement toward hybrid formats that take concepts from showrooming and “webrooming” (the act of researching products online and then buying in-store).
This will allow mom-and-pop businesses to carry slightly less inventory, decreasing floor space needs, while remaining accessible to traditional shoppers. In addition, this hybrid format will further accelerate more cooperative retail concepts as complementary stores look to co-exist in one space. As I travel across Main Street communities, I continue to see interesting combinations ranging from a barbershop and apparel store combo in Altavista, Virginia, to a bike store and coffee house in Rock Springs, Wyoming.
Keeping with the new habits theme, consumers also have found acceptance in year-round outdoor dining and even delivery from the local grocery store. One of the largest shifts has been in the growth of BOPIS. In fact, nearly 67 percent of all shoppers used BOPIS during the first six months of 2021, and by 2025, 10 percent of all retail sales will be through this method of shopping. Check out this great infographic covering the BOPIS consumer movement here
Based on the groundwork research from Robert Putnam’s “Bowling Alone,” we know that civic engagement and participation have been declining for many decades. COVID-19 certainly impacted our work in Main Streets and our grassroots model in principle. Based on a survey of Main Street Program directors, 58 percent reported “some decrease” or a “substantial decrease” in actual volunteer hours served. I predict we’ll take what we learned about “volunteer efficiencies” during the pandemic to inform how to better both attract, engage, and retain volunteers.
Using newer technologies such as Zoom for meetings and touching base have set the stage for making it easier to reach and communicate with volunteers. We are also getting far more used to “project-based volunteering” in which volunteers are given an activity to complete and then when finished the opportunity to do something else.
Project-based volunteering often occurs at the volunteers’ own time and convenience, rather than the expectation of coming to a committee meeting. This has become more widely used in promotions/event planning, but I anticipate migration across the Four Points. I also think we should anticipate that Main Street organizations will seek to partner with other local organizations that represent areas of engagement on the Four Points in order to leverage capacity and resources.
As such, work planning should also evolve into more joint planning efforts, resulting in more holistic work planning for our downtowns and commercial corridors and reflecting the entirety of revitalization activities.
Every data point suggests remote work will sustain much of its COVID-related captures as a percent of the overall workforce. This has only been reinforced by the Omicron variant, with further companies delaying return to the office timelines. Beyond the impacts on remote worker migration patterns that are often reviewed and discussed, for place professionals, we should also be thinking about impacts relative to impacts on uses and functions of downtown spaces. According to the Commercial Real Estate Association
, office vacancy rates currently stand at approximately 15 percent nationally. I would argue that while there may be some stability coming to this sector, it does not necessarily translate to people coming back and occupying the space. For example, for a number of businesses, there may be lease obligations not currently showing up in the vacancy numbers. And for office users, many are maintaining their spaces but projecting fewer people due to hybrid remote work options and moving to greater space per person requirements reversing the trend to shrink over the past many years. As such I predict we will see more commercial movement in repurposing office space to housing or longer-term stay Airbnb managed units. In December 2021, month-long stays at Airbnbs increased by 68 percent
, according to the company. These opportunities are best positioned for smaller communities within a two- to three-hour drive time of major metropolitan areas that offer amenities such as co-working spaces, internet connectivity, a pleasant downtown with third spaces, and outdoor recreation access.
Look for further business opportunities by “small-scale producers” in our downtowns resulting from supply-chain complications. The U.S. Small Business Pulse Survey from 2021
highlights the issue as companies are experiencing the lowest inventory levels in decades and 36 percent indicate serious supplier delays. While there is much talk of reshoring U.S. manufacturing efforts (look at the recent Samsung semiconductor manufacturing announcement in Texas
), that is a very long-term play and more likely to occur in highly strategic industries like computer chips, batteries, and pharmaceuticals. As such I predict two areas of growth for small-scale producers: The first comes from providing unique goods to smaller retail and wholesalers that unlike Walmart and Amazon are not in a position to control their supply chain destinies in keeping inventory on shelves for consumers. The second is as a third-party manufacturer for larger industries needing regional parts providers during this time as supply chain issues persist through 2022.
Without a doubt, the global pandemic has been the greatest accelerator of economic and societal shifts, impacting everything from the way we work, recreate, and engage with each other. Effectively, no part of our lives remains exactly the same as in February 2020. For place managers, these accelerated shifts have meant fundamental changes in our work, from how we work to the issues needing to be addressed, and opportunities to leverage. As we launch into 2022, I look forward to seeing how place professionals and mom-and-pop businesses across the country adjust, experiment, and innovate, once again demonstrating our Main Streets’ profound resiliency in the face of change.
Meet the Author
Matthew Wagner, Ph.D., Chief Program Officer: Matthew Wagner, Ph.D. serves as Chief Program Officer at the National Main Street Center, Inc. In this role, he is responsible for driving the Center’s field service initiatives including the development and delivery of technical services for Main Street America and Urban Main programs, directing the Center’s research agenda, as well as the recently launched New Business Development work to focus on national partnerships, brand leveraging and new business growth areas.
Read Matthew's bio.