Since all hell broke loose in March, PYMNTS tracking of COVID-19’s impact on small and medium-sized businesses (SMBs) — and consumer spending that favored them over category killers like Amazon and Walmart — has formed a picture of radical, disquieting change.
But hidden in that gloomy portrait are patterns of positivity for SMBs that are navigating the pandemic.
Digital is one unmysterious key to their revival. “Today, we find a consumer who has become digital-first because she is now making decisions about everything through a ‘my-health-first’ lens,” PYMNTS CEO Karen Webster recently wrote. “The question yet to be answered is whether consumers have found those experiences satisfying enough to revert to their regular pre-pandemic frequency. The many with whom I have personally spoken say they have not, despite the best efforts on the part of shops and restaurants to make it as good as it can be under current reopening restrictions.”
To that end, PYMNTS research and reporting throughout the pandemic reveals five economic and business trends that will need to take root — and quickly — if SMBs are to retain any traction:
1) Real-Time Payments
There’s no debating that Main Street SMBs’ salvation lies in part in restoring cash flow ASAP. But that’s proving difficult as phased reopenings falter and new COVID hot spots appear.
It’s pushed the issue of real-time payments for small business to front of the line, and solution providers have been busy helping Main Street SMBs with faster payment features. PYMNTS’ recent study, The Road To Recovery: Main Street SMBs And Closing The Cash Flow Gap, done in collaboration with Visa, found a serious appetite for real-time payments among Main Street SMBs.
“One of the digital tools in which Main Street SMBs show great interest is real-time merchant fund settlement. Nine out of 10 surveyed Main Street SMBs would consider using real-time settlement capabilities if available, and four out of 10 surveyed Main Street SMBs say they would be ‘very or ‘extremely interested’ in switching to point-of-sale (POS) providers or acquirers that offer that capability,” PYMNTS reported, adding that “instant availability of funds could flip the script on shuttering SMBs with limited resources.”
The Road To Recovery: Main Street SMBs And Closing The Cash Flow Gap also noted that “real-time settlement “is viewed as a welcome lifeline at a time when 60 percent of surveyed Main Street SMBs [say] that their survival is uncertain.”
2) More eCommerce
According to recent PYMNTS reporting, approximately 50 percent of all retail receipts during the pandemic lockdowns came from eCommerce, while in-store sales represented 85 percent of that total less than a year ago.
As SMBs shop solutions from “tap and go” point-of-sale (POS) systems to eCommerce solutions tailored for specific verticals, experts think Main Street is taking a hint from enterprise — diving into omnichannel experiences as deeply as they can to stay current with consumer demand.
Saying the notion of omnichannel “used to be code for the big guys trying to figure out how to dominate the market,” Colleen Taylor, executive vice president and head of merchant services at Wells Fargo, told Webster during a recent conversation that “after COVID-19, it means something entirely different.”
“Consumers absolutely are going [to] purchase differently post-pandemic, across the board. They may want to come to the store for servicing,” she said. “They may want to order online and pick up curbside. But it’s this ability to meet the customer where they are and where they want to be that is now the differentiator for all business — and small businesses have to be part of that.”
3) Touchless Payments
Physical surfaces of every description are the focus these days of intense distrust (some might say “disgust”) as people imagine an invisible coating of coronavirus everywhere.
Filed among “least-expected developments” of the turning-touchless tide is the overlooked QR code, now emerging as a hero technology in the post-pandemic fight to save SMBs.
With news in mid-May that PayPal would pilot QR code payments in 28 markets came a slew of other QR code rollouts from payments firms, FinTechs and merchants who see potential there. It’s already a massive business in China, with firms like Alipay and Tencent putting up huge numbers.
“[PayPal] accelerated the efforts around QR codes … because our consumers and merchants are demanding and requesting contactless payments, [but] a lot of payment methods today aren’t necessarily contactless. You still have to do a signature … you still have to put in PIN codes,” Jeremy Jonker, senior vice president, head of consumer in-store and digital commerce at PayPal, recently told Karen Webster. “What we developed [is] purely and truly contactless.”
This comes amid the far broader digital shift in payments choice seen as crucial to recovery.
4) More Marketing
Friends have come out of the woodwork to help ailing and failing SMBs survive this economic episode.
“Since the crisis started, Ballantyne has seen shifts in the more than 30,000 members of the organization. In the beginning, she said, the general outlook was ‘apocalyptic.’ She saw business owners go from thriving to closed, and from fully employed to furloughed,” PYMNTS reported at the time. “Now, she sees a huge difference between two groups: the SMBs with solid banking relationships and the ones that are still trying to navigate the crisis largely on their own.”
Corporate citizenship is also getting a workout in the “Save Main Street” movement.
Kevin Phalen, head of global business solutions at Visa, recently told Webster, “We’ve got to put that umbrella of advocacy across small businesses because they are so critically important. Unless they remain healthy and grow, most economies are going to struggle because more than 60 percent of the people who are working are typically working for small businesses.”
One example of this among many is Visa’s She’s Next project supporting women-owned SMBs.
5) Government Aid
There’s no questioning the current bleakness even as signs of optimism begin to materialize.
Yes, the Small Business Administration’s Paycheck Protection Program (PPP) loans took some sting out of COVID-19’s economic impacts, as did a round of stimulus checks for regular taxpayers and a fat federal boost to unemployment insurance benefits. But millions of Americans lost jobs that aren’t coming back, while we saw a record GDP free-fall of 32.9 percent.
In June, the Trump administration floated the idea of an additional $1 trillion stimulus package, but negotiations have fractured along party lines — and even between the Trump administration and some GOP lawmakers.
“If you’re looking for total consensus among Republican senators, you’re not going to find it,” Senate Majority Leader Mitch McConnell (R-Ky.) told NBC News on Tuesday (Aug. 4) after a meeting with GOP lawmakers. “We do have division about what to do.”