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For the past three years, I have put together a series of annual predictions covering the work of Main Streets and our anticipated impacts on the small businesses that make up the fabric of our downtowns and neighborhood commercial districts. Making predictions is always a risky proposition, but with great humility, I hope this can be valuable for thinking ahead and planning around the likely issues, topics, and shifts in the coming year. I will also take some time to examine my predictions from last year, which you can read here.
Looking back, this past year in many ways represented a slowing pace of change and settling into new norms. This could be called a cautionary time, in which all the talk around recessions and inflation made for decreasing consumer confidence environment and shifting spending priorities. Here are the miss, win, and push predictions from 2023.
A Miss: Bricks and Mortar Growth Continues to Outpace E-Commerce Growth
While the exuberance for a return to in person shopping in 2022 didn’t go away, it certainly settled into a more normal growth pattern, much like the 2020 e-commerce growth came back down to earth in 2021. However, much of this shift in 2023 was driven by changes in consumer spending moving emphasis from retail to services, including personal services, leisure, and—of course—fixing all the things that were bought during the pandemic. If you traveled last year, you likely noticed this shift firsthand. To demonstrate how dramatic this spending shift was, according to the OAG Company, the number of flights was up by 137 percent from 31,661 flights in 2022 to 75,161 in 2023! And while overall revenue for retail was up for the year, November 2023 data continued to highlight many of the shifts throughout the year, as much of the growth was from online shopping, restaurants, and bars.
Some key 2023 retail sales highlights:
- Compared to the same period in 2022, revenue among American brick-and-mortar stores was down 3.20 percent in 2023.
- In-store sales represented 85.1 percent of total retail sales in the first half of 2023; this is down 1.61 percent compared to the same period in 2022 (86.5%).
Small businesses need to continue to diversify revenue streams with e-commerce and by adding a service element.
A Win: What Was up in Sales During the Pandemic Now Shifts to Services
While I missed the mark on bricks and mortar retail sales, I was spot on with the shift to more services. Much of this shift was found in leisure travel, restaurants, and bars…despite the prevalence of inflationary pressures in both!
First, restaurant spending and openings grew: Diners spent more on restaurants this year, and many restaurants opened to meet the increased demand. Diners spent about 7 percent more on restaurants this year, with an average check total of $22.46. The number of restaurants that opened across the US totaled 10,608, about 6 percent more than in 2022. (Source: BentoBox’s 2023 Restaurant Trend Report)
Hotelier Marriott said global room demand from leisure travelers in the first quarter of 2023 was 10 percent above 2019 levels. And Southwest Airlines said its quarterly operating revenue by the end of June was above pre-pandemic levels. Placer.ai data also showed personal care services like beauty and fitness spending far outpacing overall retail spending through the first half of 2023.
Many retailers have reacted to this trend line by focusing on new service offerings. We are moving to a place in which businesses are offering retail goods, services, and data monetization as part of their overall strategy (Source: Beyond Retail).
A Push: Entrepreneurial Ecosystem Place “Hotbeds” Shift to Small- and Mid-sized Cities
While places like Skowhegan, Maine, and Emporia, Kansas, aren’t yet competing with Silicon Valley and the Research Triangle, there were a lot of waves generated in the entrepreneurial ecosystem space as a growing segment of the broader community and economic development field. In 2023, Skowhegan grew their new entrepreneurial center, received support funding from the Maine Technology Institute, and most recently, received U.S. Economic Development Administration Recompete program funding to the tune of $425,000. The initial success of Maine Downtown Center’s pilot entrepreneurial ecosystem work that resulted in a Senate direct appropriation through U.S. Small Business Administration to expand this work to 10 other Main Street Programs.
Great strides were made, but we’ll consider it a win when national media and conferences begin to call out and feature Main Street communities as models for small and mid-sized community small business support systems.
Predictions for 2024
Distinctions between brick and mortar and online sales have become far blurrier as physical stores continue to seek growth in online transactions as part of their revenues, and purely online stores seek out real estate plays.
By separating these sales categories, we are creating a competition that doesn’t need to exist. Salesforce predicted that bricks-and-clicks businesses will outpace brick and mortar or e-commerce only businesses by 1.5 times.
Winning Main Street small businesses will be those that craft a business model that creates in-store experiences where consumers want to engage with the purchase, share social time, create a memory, etc. At the same time, small businesses should move products and services that are purely transactional— delivery, in-store pick-up, etc—to more online formats in which consumers prefer convenience.
The bricks-and-clicks evolution has resulted in an ever-decreasing average square footage in U.S. retail. Given that most of our Main Street businesses are in fixed size buildings that are difficult to break into smaller storefronts, retailers will need to find ways to creatively generate increased traffic and fully utilize their spaces.
One solution is adding additional services as part of the retail revenue model or vice versa, adding products to the service business. Research from Square and Wakefield found that 59 percent of consumers are likely to buy an item from a restaurant or retail store that isn’t a part of its main offering. Mixing retail and services provides additional reasons for consumers to come into their stores, a more diverse mix of customers, and differentiation from pure e-commerce businesses.
Rather than trying to populate via a standalone pop-up location, Main Streets and other place-based programs can leverage existing small businesses as event spaces and pop-up locations for new businesses seeking market exposure. This format creates a number of win-win scenarios with consumers benefiting from new shopping opportunities and a great density of activity and engagement.
In my work, I have seen a significant gap between how younger generations access information and the marketing and communication tools utilized by Main Street businesses. To engage this younger demographic, businesses need to continue to shift social media usage from platforms like Facebook to places like TikTok and communication engagements from email and e-news to SMS.
Data is showing that younger generations are spending a greater portion of their resources on experiences. A June 2023 report from Experian revealed that 63 percent of Gen Z and 59 percent of millennials would rather spend money on “life experiences” like travel and concerts that they can enjoy right now, rather than save up for retirement.
Each generation's spending habits vary significantly. Unfortunately, that means marketing to each and considering product inventory and experience can be complex. For example, looking at retail marketing, many small businesses have become accustomed to posting pictures on Facebook and Instagram. However, there is great segmentation emerging in social media marketing. TikTok’s top demographic (21 percent) is 18-24 year-olds, and that age group makes up 34 percent of Snapchat users. Facebook skews older, with 29.9 percent of their market made up of the 25-34 age group (Source: Sprout). As such, retail advertising will transition to higher levels of personalized content and on distinct channels, referred now to as direct-to-consumer (D2C).
For the past several decades, direct-to-consumer marketing has been focused on social media, email, traditional advertising, and leveraging influencers. But as consumers become overwhelmed with messages, SMS is rising to the top. According to Gartner, SMS boasts an open rate as high as 98 percent and a response rate as high as 45 percent. This makes SMS for retail one of the highest-performing marketing strategies. Benefits of SMS for retail include improved customer engagement, increased customer acquisition, and soaring sales rates.
Keep an eye on WhatsApp as well. WhatsApp's popularity in the US has steadily grown over recent years. In 2019, approximately 68.1 million US mobile phone users accessed WhatsApp. The figure has since grown and was projected to reach around 85.8 million users in 2023. WhatsApp's largest demographic is 18 to 34 years old. And WhatsApp is the dominate player in Latin American and Asian business. This fact further aligns with US population and small business growth whereby Latino and Asian American are the fastest growing racial and ethnic demographic segments.
Throughout 2023, we saw artificial intelligence (AI) create headlines for its potential for wonderful economic innovation and productivity. Global and large national retailers began to focus and incorporate it to improve everything from their marketing to supply chains.
For the small business owners, 2024 becomes the year when more Main Street small businesses use AI in two primary ways.
- As a personal assistant, helping to quickly draft social media content and strategies for the business.
- To help with inventory planning and curating more personalized products for key customers that opt in.
As with any new technology there will be early adopters among Main Street businesses, with thousands more to follow.
Check out a discussion on the benefits of AI in our Grow with Google Tools webinar >
It was only seven years ago that I attended my first E-Ship Summit hosted by the Kauffman Foundation. It was truly inspiring, but I remember wondering, “where is the discussion around the importance of PLACE in ecosystem building?” Fast forward, there has been much progress in this area—much of it through the great work of local Main Street ecosystem builders. Taking this idea one step further, I’m predicting in 2024 that we will see more attempts to create greater synergies between our efforts at using place both as a focal point of hyperlocal small business ecosystems, but also the tangible real estate and programming that takes place in our downtowns and neighborhood commercial districts and the more high-tech/manufacturing sector ecosystems focused on unique forms of capital infrastructure, talent agglomeration, and sector infrastructure.
This intersectionality has two primary macro drivers.
Economic development has become highly dependent on human capital. Given mobility within high-propensity ecosystems, human capital is seeking quality of place as they have more choices where to live and work.
In an "age of dispersion," in which nearly anything can be done online, people are demonstrating a natural yearning for community engagement and human interaction.
Logical intersections of these two focused ecosystems will center on:
- Housing – Affordability and Availability
- Third Spaces and Places for “Accidental Collisions”
- Broadband Infrastructure
- Professional Services
- Incubators/Accelerators/Shared Kitchen Facilities/CoWork, etc.
- Culture and Entertainment Venues
While the “age of sispersion” has created wonderful opportunities to work (remote work), shop (e-commerce), educate oneself (online learning), and even receive medical advice (telemedicine), it has also resulted in the demise of real community and connection.
For decades, Americans reported spending about six and a half hours a week with friends. But from 2014 to 2019, it suddenly dropped by 37 percent, to four hours a week. There are growing concerns around the impacts of loneliness and isolation on mental and physical health. One in five Americans reported feeling lonely or socially isolated often or all the time in 2018. One study found the rate of loneliness among young adults rose almost every year between 1976 and 2019. In a 2019 YouGov poll, 22 percent of millennials reported having no friends at all.
Third spaces are important gathering places where people can create and build community in both public and private spaces–and they can often be found in our downtowns and neighborhood commercial districts. Historically, we found third spaces in coffee houses, breweries, libraries, and even salons/barbershops. In 2023, I have noticed retailers and service providers picking up on the need for third spaces to expand their businesses. For example, walk into Blanco Creek Boutique, a women’s clothing store in Tucumcari, New Mexico, and you’ll find a large sitting area where you can sip on Jackalope Coffee. According to the owner, the coffee shop and clothing store used to be separated, but she saw the opportunity to provide a value-added experience for her customers through community building.
In 2024, I anticipate that this strategy will continue, as well as more hosted instore events designed to foster spaces where customers can connect, share, and engage with the brand and one another. This sense of community is not only enriching the shopping experience but also driving brand loyalty, turning customers into brand advocates.
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, your businesses, and your communities throughout the year, I encourage you to reach out to us at info@mainstreet.org and share your own observations as well. We will continue to monitor these trends and predictions and incorporate our findings and your experiences into evolving and adaptable planning tools for your Main Street program's continued resiliency.
If you’re interested in learning more about small business trends and Main Street impacts, listen to the upcoming Season 2 of the Main Street Business Insights podcast. The first episode will air on January 31 wherever you listen to your podcasts.
Community Heart & Soul, a Main Street America Allied Member, is this quarter's Main Spotlight advertiser. For more information about the products and services they provide to Main Street organizations, click here >
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Main Spotlight: Get Used to It — The Pivot Is Not Going Away
The COVID-19 pandemic has long-lasting effects on the economy. Here are 11 changes that small business owners should continue to remain competitive.
Reflecting on the History, Legacy, and Future of Black Wall Street in Tulsa
This May marked the 100th anniversary of the Tulsa Race Massacre in the Greenwood neighborhood of Tulsa, Oklahoma. We explored the impact and legacy of this tragic event.
Tulsa, OK © Dr. Tiffany Crutcher
Main Spotlight: Creating a Community for Inclusive Entrepreneurship in Fremont, CA
Learn about the various programs and initiatives that Fremont is using to promote inclusive economic development.
Fremont, CA © Fremont Economic Development
For an Inclusive Recovery, We Need Support for Small Business and the Groups that Help Them
BDOs are place-based organizations that help small businesses and entrepreneurs to flourish. They have been on the frontline of support for the country’s hardest-hit entrepreneurs throughout the pandemic and have been working to enable thriving commercial corridors throughout the crisis.
Main Spotlight: Five Takeaways on Supporting Entrepreneurship from Matthew Wagner, Ph.D.
Matthew Wagner, Ph.D., Chief Program Officer at Main Street America, was featured on Breaking Down Barriers: a podcast from Startup Space highlighting stories of community leaders who break down barriers to entry for underserved and unrepresented entrepreneurs.
Main Spotlight: Windows of Opportunity — The Transformation of Empty Storefronts on Main Street
A vacant storefront is the perfect stage to creatively promote the available space or to showcase other businesses and events in the area.
Ripon, WI © RetailWorks, Inc
Small Businesses E‑Commerce Usage Continues to Increase as Holiday Revenues Were Mixed: Results from Our January 2021 Survey of Small Business Owners
We heard from 289 business owners in 35 states plus the District of Columbia in our new text message-based survey of small business owners across the network.
Community Spotlight: Paving the Path from Pop-up to Permanent at the Batavia Boardwalk Shops
The Batavia Boardwalk Shops are freestanding, purpose-built structures acting as seasonal pop-up locations for entrepreneurs, offered in tandem with a business incubator program.
Batavia, IL © April Duda Photography
Business Spotlight: Black Entrepreneurs Leading By Example in Chicago
For Black History Month, we want to recognize and celebrate the Black business owners and entrepreneurs who have overcome challenges and obstacles in launching and running their own businesses, thanks to resilience, creativity, and hard work.
Main Spotlight: Pop-Up Retail: Not Just For Start-Ups, And Other Learnings From Its Evolution
As a vital place factor within an entrepreneurship ecosystem, pop-up programs allow for emerging businesses to test their product, gain consumer feedback, and promote their brand at an extremely low cost. In essence, allowing for a ‘fail-fast’ product development cycle.
Asheville, NC © Ablohkin
Coping with the COVID Crisis in the Midst of the Holiday Rush: Nine Takeaways from Our December Surveys of Small Business Owners and Main Street Programs
In early December, as the COVID-19 crisis intersected with a peak moment in the holiday shopping season, we surveyed small business owners and Main Street programs to learn more about how they were managing.
© Cindy Shebley
Jump off the Business Recruitment Train: The Real Returns are in Cultivating Local Entrepreneurship
New research by Main Street America suggests greater returns on our missions and resources can be had by transitioning to more deliberate economic vitality work centered on cultivating new business development from within our own communities and neighborhoods.
Community Spotlight: Storefront Activation Through Storytelling in Fredericksburg, VA
Fredericksburg Virginia Main Street (FVMS) is taking storefront activation to a new level with their new initiative, the Scan & Love Project, which tells the stories of business owners through personal and engaging videos.
HartBeat of Main Street Grant Program: Spotlighting Tina’s Timeless Threads
Meet a recipient of the HartBeat of Main Street Grant Program
HartBeat of Main Street Grant Program: Center of the Yarniverse
Meet a recipient of the HartBeat of Main Street Grant Program
HartBeat of Main Street Grant Program: Spotlighting The Bankery
Meet a recipient of the HartBeat of Main Street Grant Program
HartBeat of Main Street Grant Program: Spotlighting BuzzBomb Brewing
Meet a recipient of the HartBeat of Main Street Grant Program
HartBeat of Main Street Grant Program: Spotlighting The Owl Wine Bar & Home Goods
Meet a recipient of the HartBeat of Main Street Grant Program
HartBeat of Main Street Grant Program: Spotlighting Griff Goods
Meet a recipient of the HartBeat of Main Street Grant Program
HartBeat of Main Street Grant Program: Spotlighting Mockingbird Bar and Tacos
Meet a recipient of the HartBeat of Main Street Grant Program
Economic Gardening Takes Root: Redesigning the Bricks & Clicks Business Retention Program During the Pandemic
Harrisonburg Downtown Renaissance explores how they redesigned their Bricks & Clicks Business Retention Program during the pandemic.
Business Spotlight: Women-Owned Businesses on Main Street (Part 3)
Meet some amazing women business owners!
Local Impact: Small Business Saturday
Small Business Saturday® is more than a day to shop. It’s a nationwide movement that shines a spotlight on the importance of supporting small businesses in communities across America.
Community Spotlight: Benson, North Carolina
The Town of Benson started a special project to highlight their downtown businesses.
Community Spotlight: Berkley, Michigan
The Berkley Downtown Development Authority (DDA) proudly debuted its Downtown Berkley Shopping Bag for a Cause through a partnership between Better Life Bags.
Main Spotlight: Learnings from the ESHIP Summit
Supporting new and existing small businesses, and the entrepreneurs who run them, represents a vital aspect of the revitalization of downtowns and neighborhood business districts.
Creating Equitable, Inclusive and Transparent Cities: A Year in Review
The Equitable Economic Development Fellowship is a two-year, one million-dollar effort funded by the Surdna Foundation and the Open Society Foundations to help equity, transparency, sustainability and community engagement become driving forces in local economic development efforts.
Community Spotlight: Mini-Grants Offered to Small Businesses in Jefferson, Iowa
The Jefferson Rotary Club partnered with Jefferson Matters: Main Street to offer mini-grants for building facades and storefront signage to two dozen businesses for up to $500 each.
A Memorable Makeover on Main Street
The Wisconsin Economic Development Corporation (WEDC) partnered with Retailworks, Inc., a commercial interior design, display and branding firm headquartered in Milwaukee, to launch Wisconsin’s Main Street Makeover Contest.
Creative Discovery on the Maker Trail in Enid, Oklahoma
Kelly Tompkins of Main Street Enid shares more about the Maker Trail project and how it inspired creativity and helped people discover downtown.
City Sidewalks, Dressed in Holiday Style
Too often, as we’re strolling our favorite Main Street, we pass empty or dark shop windows that make us want to hurry home a little bit faster. Imagine instead, a charming streetscape adorned with vibrant, lively window displays, showcasing retailers’ favorite products and seasonal gift ideas.
Community Spotlight: #ShopSmall in Goldsboro, North Carolina
Small Business Saturday promo pic from Downtown Goldsboro, North Carolina, showing all the folks who took the pledge support a small business in their community.
Using Local Search Trends to Attract More Customers to Your Main Street
We’ve put together a practical list of some of the things that local store owners can do right now to help them capitalize on this increasing trend in local searches.
Network Spotlight: Main Street Iowa Restaurant Week
From authentic comfort food to farm-to-fork fresh and everything in between, these restaurants, bars, and cafes are key to the thriving social, business, and residential life in the historic commercial districts in Main Street Iowa communities.
Fab Lab Sparks Rural Opportunities
Located in southeast Kansas, Independence (pop.8,799) is home to Fab Lab ICC, which is on track to be the world’s leading innovator in combining entrepreneurial mindset education with a fab lab maker space.
Community Spotlight: Morganton, North Carolina
The craft beer industry is playing a key role in the rebirth of Main Streets and neighborhood commercial districts across the county.
Rethink Storefront Accessibility to Rethink Community Viability
Appealing to mobility-challenged shoppers yields benefits beyond the store.
Sparking a Movement in Small Business and Small Towns
Being the only person in the know can be fun, exhilarating even. Except when you are the one person out of 600+ in a room and you know bad news is coming.
The Lowdown in Downtown LaBelle
Fritz the dog has made his way into the hearts of the residents of LaBelle, Florida, and helped our Main Street Community find a way to make what we do more noticeable.
Pop-Up Altavista 2.0
Altavista On Track, the local Main Street organization, is working to cultivate and sustain local entrepreneurs with an educational business launch competition, Pop-Up Altavista 2.0.
The Bright Center: A Space for Winchester’s Bright Minds to Create, Innovate and Thrive
In Winchester, Virginia, one woman’s vision and commitment to downtown’s revitalization created an innovative community space for the Creative Class.
Why Business Retention and Expansion Plans are Important for Downtowns
A business retention and expansion plan, properly implemented, not only helps keep businesses open but possibly even helps them expand.
Business Investment Guides: “Think B.I.G.”
The first rule of conducting business is “make it simple.” The easier it is to pay for merchandise, get entertainment or obtain a service, the more likely it is that people will take advantage of those options.
Small Box – A Creative Retail Project
Main Street communities across the country are no stranger to seeking creative strategies to solve their most nagging issues – vacant buildings, marketing downtown, bolstering retail to name a few.
Supporting Immigrant Entrepreneurs in the Heart of Boston’s Main Streets
To understand the role that immigrant business owners play in Boston’s small business ecosystem, you need only to walk through any Boston Main Streets district.
Measuring the Economic Impact of Storefront Improvements
Façade appearance is a critical aspect of the overall aesthetic appeal and unique character of downtown.
Sign Design Guidelines
A lot of signs are necessary to make a downtown work well, but not every community knows what a good sign system looks like, or how instrumental it can be to the creation of a successful downtown.
Improving Performance in Main Street Iowa Communities
Main Street Iowa, a program of the Iowa Economic Development Authority’s Iowa Downtown Resource Center, created a one-of-a-kind three-year program to provide help for performance venues located in Main Street districts.
