Change Ahead on Main Street: Survey Gives Small Businesses Insight Into What’s to Come

There’s no doubt small businesses are a large part of the American economic fabric. In fact, the U.S. Small Business Administration Office reported 32.5 million small businesses in 2021, comprising 99.9 percent of companies nationwide and employing 61.2 million people.

This year, Cox Business released results of its 2022 consumer sentiment survey, focused on uncovering insights into key challenges like inflation and engaging with businesses in the metaverse — all of which impact their support of small businesses.

Here’s what we found that will help your business succeed in 2023 and beyond.

Inflation’s Effect on Main Street

Inflation is at its highest in decades, sitting currently at 8.2 percent, according to Kiplinger’s September 2022 Economic Outlook. While prices of goods are beginning to flatten, the report highlights sustained price hikes in services corelated with rising wages.

The consumer sentiment survey reveals rising prices and the lack of availability of certain goods has driven some people away from shopping small. This is an about-face from 2020, when there was a movement to support small retailers during the COVID-19 lockdown. Those surveyed said they're shopping at larger stores because prices are more affordable.

The 11 percent of respondents who shopped less frequently or stopped supporting small businesses with their dollars this year indicate expensive shipping costs (43 percent), limited inventory or availability of goods (41 percent), and inflation-related price hikes (34 percent) all were contributing factors.

However, even amid hefty costs, many consumers are increasing their support of Main Street. Thirty-five percent of respondents reported they’ve increased patronage of small businesses, and 50 percent said they've continued to shop at these merchants the same amount.

So, how can small business owners keep their shoppers coming back for more? Leaning into hot technologies is a great place to start.

The Evolution of Consumer Expectations

Although predicting the future with 100 percent accuracy is impossible, Main Street should respond to today’s consumer trends to improve the likelihood of success now and tomorrow.

Brands can’t change inflation or untangle the supply chain, but they can entice shoppers through creative endeavors. For example, they should explore digital experiences or a presence in the metaverse to meet younger consumers’ desires for interacting with brands in this up-and-coming world.

The Surge of the Metaverse

The metaverse is getting plenty of attention lately, particularly from Generation Z and millennial shoppers, and is increasingly popular in the retail sector.

Bloomingdale’s, for example, celebrated its 150^th anniversary with an event in the metaverse. In partnership with startup Emperia, the heritage brand launched a virtual store during New York Fashion Week in September, featuring digital collections from top luxury designers and virtual shopping experiences.

Although just one-fifth of shoppers who responded to the Cox survey have interacted with retailers in the metaverse, 75 percent of those that have said they would continue to interact with small- and medium-sized businesses with a virtual presence.

Research shows Gen Z consumers spend double the amount of time socially interacting within the metaverse than they do in the real world. As such, small businesses wanting to engage them should consider donning an oculus and dipping their toes into the metaverse.

Whether that be gaming, outfitting their digital avatars or enabling people to customize their own virtual store, like Forever 21, making your mark in the virtual ecosystem will not only help your business stand out, but position it as forward thinking with an entirely new shopping experience for customers to enjoy.

Tech Trends Gain Traction

Outside the metaverse, other trends today’s consumers are leaning into include experiences driven by technology. In 2020, more than 92 million American consumers used mobile payments at least once. Furthermore, usage is forecast to surpass half of all smartphone users by 2025, showing contactless payments aren't just rising but have staying power.

According to the Cox survey, more than half of respondents said touchless options would improve shopping at SMBs. Compare that to just 21 percent who said the same in 2019. People adopting contactless payments during the pandemic loved its safety and convenience and don’t plan to revert back.

Other top tech that shoppers are using include real-time personalized discounts (51 percent), app-based store navigation (25 percent), and artificial intelligence-enabled payments (think Amazon Go).

Keeping abreast of tech trends is key to engaging with today’s safety- and efficiency-minded consumers. Savvy SMBs can respond to many of the latest consumer wants and needs. Understanding shopping trends and the goings-on in respective communities will simultaneously enable better preparedness for what lies ahead.

Mollie Andrews is senior vice president, Cox Business Marketing and Sales Operations.