January 25, 2023 | Main Spotlight: 5 Predictions for 2023 | By: Matthew Wagner, Ph.D., Chief Program Officer |
In January 2022, we released our first-ever annual predictions covering the work of Main Streets and anticipated impacts on small businesses that make up the fabric of our downtowns and neighborhood commercial districts. Making predictions is always a risky proposition but is a valuable pursuit to get a better idea of what to keep an eye out for in the coming year. Perhaps an even more risky proposition is to take a reflective look back to see what was on target, what was a mixed bag, and what we got wrong. So, before we dive into what we expect to see in 2023, let’s take a look at a few of last year’s predictions and see how they played out.
GOT IT RIGHT: Main Street Workforce Constraints Remain, Resulting in Accelerated Technology Integration and Further Business Model Shifts
Unemployment remained low throughout 2022, with recent layoffs primarily impacting the technology sector. Stories abounded throughout the year of small businesses continuing to make shifts or integrating technology. One of these stories landed on the front page of the September 26th edition of the Wall Street Journal that covered a Milledgeville, Georgia, plumbing company from our entrepreneurial ecosystem work with partner Georgia Power and Georgia Main Street.
MIXED BAG: Certain Retail Sectors Will Continue to Grow While Others Level Off
For decades, the U.S. ecosystem hubs were concentrated along the coasts (think California’s Silicon Valley and Boston’s Route 128 Technology Corridor). Due to technology business relocations and consolidations in finance, places like Austin, D.C., Chicago, Charlotte, and Atlanta, have witnessed an acceleration of greater talent concentrations over time.
Yes, I know many of you may be thinking “when did that happen?!?” Certainly, in early 2020 the rate of e-commerce sales growth was off the charts—in fact, during an 8-week period in March and April 2020, e-commerce growth exceeded the equivalent of what occurred in the previous decade. But what we have also witnessed during the global pandemic is an unexpected awakening, with consumers realizing what they missed when it was gone: the experience of going into a store, interacting with other humans, seeing family or neighbors, and just being able to use their senses as part of shopping. We had missed this essential form of leisure. In fact, the tide had already begun to turn in 2021. In evaluating the following graphic with data from the U.S. Department of Commerce, bricks-and-mortar sales growth began to surpass e-commerce sales growth during the first quarter of 2021, and throughout the year kept a consistent 6-7 percent growth advantage.
During the pandemic there were a number of particular retail sectors that experienced sizable growth. For example, retail bike sales grew by 54 percent from April 2019 compared to April 2021. Sales and interest in garden sheds grew by 400 percent. And in April 2021—powered by consumers having extra-large covid relief tax refunds—furniture sales were up 181 percent over the previous months. But that was then, and as we saw in 2022, overall retail sales began to reach some norm-setting more consistent with 2019 than 2021. Inflation headwinds are part of the equation, but the fact is that 2021 was such an incredible spending year that in 2022, many consumers already had a lot of what they could not get in 2020. As such we would anticipate consumers will now direct more of their spending to servicing those past purchases and more leisure experiences. So, what does that look like for Main Streets? Time to work with our retailers to add more service elements!
- For bike stores: more servicing elements, groups rides, and perhaps joint service promotions with travel agents for bike excursions. While bike sales are down, bike riding as a form of recreation remains very strong—just ask our friends over at Rails-to-Trails.
- For clothing, shoe, and other fashion retailers: repair services. Yes, even Tommy Hilfiger and Hugo Boss are launching repair services as part of a movement toward more eco-friendly “repair, reuse, and recycle” shifts in consumers. It’s one way to keep the consumer engaged in your store when inflation threatens a pullback in new sales.
- For restaurants: more cooking classes and online video tips. Consumer dining remains strong, but eventually that will start to pull back with economic shifts and diners realizing all the home improvements they made during the pandemic could be more fully utilized. This is another way to keep customers engaged and coming back.
Much of the news cycle over the past year has reflected on our younger generations through the lens of workforce participation. In fact, Gen Z will make up 30 percent of the workforce by 2030. But for Main Street, 2023 will mark a highly visible shift in asset ownership along our neighborhood and downtown commercial districts. The context for this prediction simply comes from observations throughout visits to 50 plus communities in 2022 in which whether it was focus groups of entrepreneurs or district tours, there was an obvious youth movement.
For years, names like Jamie Diamond, Jeff Bezos, and Elon Musk have dominated the news cycle and even entertainment pages. Some might refer to this as corporate idolatry. In 2023, we believe there is a real opportunity to really showcase and highlight the importance of Main Streets and the small business owners as essential players who make of our neighborhoods and downtowns as critical to one’s quality of place and to what truly brings value to the consumer experience. With the rise of the “covidprenuer,” these past two years have witnessed amazing growth in individuals endeavoring to reach their dreams of business ownership. Many of those individuals chose to launch along our Main Streets for the very reason that they wanted to give back to their community and be a part of something bigger than just their business. This motivation is often missing in corporate America and consumers took notice during the pandemic when businesses were shut down. Join us in the coming months as we begin to push this storyline as part of Main Street’s brand and identity.
In closing, I’m a big believer that innovation occurs at the crossroads of people’s different backgrounds and experiences. While these are just some of my thoughts based on visiting with many of you and your communities throughout the year, please reach out and share your own observations. We will continue to monitor these trends and predictions for 2023 and look to incorporate our findings and your experiences into evolving and adaptable planning tools for your Main Street program's continued resiliency.
Community Heart & Soul, a Main Street America Allied Member, is this quarter's Main Spotlight advertiser. For more information about what they do to support Main Street organizations, click here.