It would be much easier to name all the segments not hit hard by COVID-19 and the subsequent economic chaos it has unleashed than it would be to name all those that have been. But as is often the case during times of economic turbulence, the costs are being borne the most by Main Street SMBs that have been forced to furlough workers and close their doors (at least temporarily). And according to new second-quarter data for the Yelp Economic Average, 55 percent of businesses that have shut down during the pandemic don’t plan to ever reopen.
“As U.S. cities struggle to balance reopening their local economies and avoid becoming the next COVID-19 hotspot, we’ve seen U.S. business-closure data reflect an unstable economy,” said Justin Norman, Yelp’s vice president of data science. “Yelp data found a decrease in total business closures, but the rate of permanent closures has actually risen 14 percent between June 15 and July 10. Cities such as San Francisco and Honolulu, which have had some of the nation’s strictest stay-at-home orders, are now seeing the highest numbers of closures relative to the number of businesses in their respective cities.”
Restaurants lead the pack among struggling Main Street merchants. The restaurant industry recently edged out retail for the dubious distinction of having the highest total U.S. business closures. According to Yelp, 26,160 eateries had closed due to the pandemic as of July 10. Some 60 percent of those shutdowns are permanent.
But while discomforting to watch, such closures shouldn’t be surprising given what SMB owners have told PYMNTS during surveys in recent months. When we first polled SMB owners in late March, 58.4 percent of respondents believed they were at risk of closing before the end of COVID-19 and its economic impact. That included 25.8 percent of respondents who were sure they wouldn’t survive, as well as 32.6 percent who weren’t sure whether they’d make it or not.
Still, the latest data from Yelp isn’t all doom and gloom for SMBs. The study did find some green shoots, spurred on by warmer weather and a growing share of consumers who are more interested in getting back out in public.
For example, Yelp found that seasonally adjusted consumer searches for open-air markets have risen 73 percent recently. Similarly, searches for flea markets are up 28 percent and outlet stores have seen a 13 percent increase.
Similarly, outdoor activities like zip-lining, ATV rentals and amusement parks have all seen a recent boost in consumer interest. Additionally, Yelp saw a 51 percent spike in searches for indoor ax throwing (really), a 45 percent gain for information about escape rooms and a 13 percent rise in inquiries about boxing matches.
What happens when summer weather cools and interest in outdoor activities presumably cools along with it? That’s hard to say.
After all, the pandemic is proceeding at a wildly uneven rate throughout America, with half of the states reporting cases increasing and the other half seeing decreases. That makes it hard to come by universal predictions about what’s next for Main Street.
But the SMBs that forecast being hit hard by COVID-19 were right to be concerned. It’s also obvious that to stay afloat in the choppy seas ahead, SMBs will need a lot of innovation – and a little bit of luck.