Business
Mapped: The Uneven Recovery of U.S. Small Businesses
Mapped: The Uneven Recovery of U.S. Small Businesses
Small businesses are the backbone of the U.S. economy, employing nearly half of the private sector workforce.
Unfortunately, lockdown and work-from-home measures brought about by COVID-19 have disproportionately affected small businesses – particularly in the leisure and hospitality sectors.
As metro-level data from Opportunity Insights points out, geography makes a great deal of difference in the proportion of U.S. small businesses that have flipped their open sign. While some cities are mostly back to business as usual, others are in a situation where the majority of small businesses are still shuttered.
The Big Picture
In the U.S. as a whole, data suggests that nearly a quarter of all small businesses remain closed. Of course, the situation on the ground differs from place to place. Here’s how cities around the country are doing, sorted by percentage of small businesses closed as of September 2020:
| Metros | Small Businesses Closed | Small Businesses Closed (Leisure & Hosp.) |
|---|---|---|
| San Francisco | -49% | -65% |
| New Orleans | -45% | -72% |
| Honolulu | -41% | -39% |
| Washington DC | -37% | -55% |
| San Jose | -35% | -41% |
| Portland | -34% | -46% |
| San Antonio | -34% | -60% |
| Sacramento | -33% | -43% |
| Boston | -33% | -42% |
| Oakland | -32% | -52% |
| Austin | -32% | -65% |
| Bakersfield | -31% | -64% |
| Houston | -30% | -58% |
| Seattle | -28% | -47% |
| San Diego | -28% | -41% |
| Baltimore | -28% | -43% |
| Detroit | -28% | -44% |
| Los Angeles | -27% | -39% |
| Chicago | -27% | -37% |
| Tucson | -27% | -37% |
| Atlanta | -26% | -33% |
| Fresno | -26% | -50% |
| Oklahoma City | -26% | -56% |
| Cleveland | -26% | -39% |
| Denver | -26% | -56% |
| Indianapolis | -25% | -29% |
| Denver | -25% | -38% |
| El Paso | -25% | -34% |
| Philadelphia | -24% | -34% |
| Tulsa | -23% | -40% |
| Albuquerque | -23% | -42% |
| Colorado Springs | -23% | -37% |
| Louisville | -23% | -25% |
| Miami | -23% | -38% |
| Fort Worth | -22% | -34% |
| Las Vegas | -22% | -35% |
| Tampa | -22% | -45% |
| Milwaukee | -22% | -30% |
| New York City | -21% | -40% |
| Dallas | -21% | -38% |
| Memphis | -21% | -37% |
| Minneapolis | -21% | -36% |
| Nashville | -21% | -39% |
| Columbus | -21% | -35% |
| Phoenix | -19% | -36% |
| Jacksonville | -18% | -35% |
| Salt Lake City | -18% | -24% |
| Charlotte | -18% | -42% |
| Raleigh | -16% | -34% |
| Wichita | -15% | -29% |
| Kansas City | -15% | -24% |
| Omaha | -13% | -14% |
New Orleans and the Bay Area are still experiencing rates of small business closures that are almost double the national median.
Small businesses in the leisure and hospitality sector have been particularly hard hit, with 37% reporting no transaction data.
Getting Back to Business
Some cities are seeing rates of small business operation that are nearing pre-pandemic levels.
Of the cities covered in the data set, Omaha had the highest rate of small businesses open.
Still Shuttered
In cities with a large technology sector, such as San Francisco and Austin, COVID-19 is shaking up the economic patterns as entire companies switched to remote working almost overnight. This is bad news for the constellation of restaurants and services that cater to those workers.
Likewise, cities that have an economy built around serving visitors – Honolulu and New Orleans, for example – have seen a very high rate of small business closures as vacations and conferences have been paused indefinitely.
As the pandemic drags on, many of these temporary closures are looking to be permanent. Yelp recently reported that of the restaurants marked as closed on their platform, 61% are shut down permanently. As well, businesses in the retail and nightlife categories also saw more than half of closures become permanent.
In Remembrance of Revenue
A business being completely closed is a definitive measure, but it doesn’t tell the whole story. Even for businesses that remained open, revenue is often far below pre-pandemic rates.
Once again, businesses in the leisure and hospitality sector have been hit the hardest, with revenue falling by almost half since the beginning of 2020.
At present, it’s hard to predict when, or even if, economic activity will completely recover. Though travel and some level of in-office work will eventually ramp back up, the small business landscape will continue to face major upheaval in the meantime.
Retail
Visualized: 10 Black Friday Retail Trends
Consumers are expecting more this Black Friday, but for retailers, the pressure is mounting. Here are 10 trends that may impact them in 2023.
10 Black Friday Retail Trends
This year, retailers are under major pressure to orchestrate even more substantial and enticing Black Friday discounts for their customers.
We partnered up with Airwallex to visualize the latest available data from 2022 to understand what this year’s holiday weekend could look like for retailers.
Consumer Loyalty and Price
Theme: Buyer Behaviour
In a 2022 U.S. study conducted by Emarsys, 58% of people claim they are more loyal to retailers that offer them discounts, incentives, and rewards, indicating that price plays a crucial role in fostering loyalty.
Moreover, 60% of respondents admitted to turning their back on the brands they were previously loyal to in an effort to save money amid inflation hikes.
Convenience is King
Theme: Buyer Behaviour
Salesforce notes that 2022 saw a global increase of 9% in Buy Online, Pick Up In Store (BOPIS) adoption during Cyber Week compared to early November data.
Specifically in the U.S., retailers offering BOPIS experienced 38% higher growth in online revenue during Cyber Week compared to those without this service.
Global Spending is Up
Theme: Spending Patterns
Globally, 2022 Cyber Week spending increased 2% YoY to $281 billion. This is despite some regions experiencing a decline and some retailers reporting lighter foot traffic.
Margins at Risk
Theme: Spending Patterns
While consumers are spending more, retailers are still seeing their margins squeezed due to a variety of factors such as high inflation, high cost of goods, strained systems, and increased demand for discounts.
That is why we are starting to see certain retailers choosing to “boycott” Black Friday, and although estimates vary, The Guardian reported that as many as 85% of smaller retailers were not participating in Black Friday in 2021.
The Smartphone Surge
Theme: Buyer Behaviour
According to Adobe, 47% of U.S. online sales came from smartphones during the 2022 holiday spending season—up from 43% in 2021.
This reflects a broader trend within the retail sector, aligning with projections for substantial growth in the global mobile commerce market.
Deeper Discounts
Theme: Spending Patterns
In another benefit to consumers, discounts are getting deeper. Throughout the 2022 holiday season, the average discount stood at 21% compared to 19% in 2021 with apparel, skincare, and beauty touting the deepest discounts.
Alternative Payment Options
Theme: Payments
When it comes to payment methods, alternatives such as Buy Now Pay Later (BNPL) are gaining traction, as evidenced by a 5% increase in orders YoY.
Financing Lower-Priced Goods
Theme: Payments
Despite the success of Buy Now Pay Later, the average order value decreased 5% YoY, meaning consumers are using the payment method more, but to help finance lower-priced goods.
Sales Spikes in APAC + Europe
Theme: Payments
Even though Black Friday has been traditionally viewed as an American retail phenomenon, it has transcended its U.S. origins and has been embraced by consumers the world over.
Several countries witness significant spikes in online sales in 2022, most notably in Australia with a +239% sales spike, and Spain at +576% spike when compared to average October sales.
Retailers Hit with Hidden Fees
Theme: Payments
Did you know that merchants of all shapes and sizes can often find it hard to escape paying unnecessary transaction fees during the holiday season?
For context, every international dollar a retailer generates during the holiday period could be converted up to three times, costing them up to 5.5% of every transaction.
Considering the multitude of benefits afforded to consumers during Black Friday and the holiday season, the question that looms is: is this retail bonanza genuinely worthwhile for retailers?
By partnering with Airwallex, retailers can simplify global payments, but also capitalise on increased consumer spending—without sacrificing on profit.
Learn more about Airwallex now.
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