Bloomberg News reports that following eighteen months since the start of the pandemic, the recovery of businesses worldwide has not been even. The location has played an instrumental role in the financial success of a storefront business.
Business establishments in the not-so commercial areas and residential locations have shown a better recovery in the current year as compared to the commercial districts that used to bustle with a lot of activity of with workers and even tourists during the pre-pandemic time.
This observation is reported by the Mastercard Economics Institute’s analysis since business entities accept plastic cards across as many as 28 metropolitan areas in 19 countries.
As compared to 2019, spending at medium and small-sized business establishments improved by 8% in 2021, prominently in the residential districts. However, the stores located in the central districts have still not returned to the pre-pandemic levels.
Bloomberg News reports that the sales have gone down to 33% in these areas during the same time. The data that has been obtained indicates the prevailing hurdles for the neighborhoods that are work-centric traditionally.
The main reason for the situation is that not many have returned to their offices, which affect not just the occupation at office spaces but also the businesses that support the officegoers.
In New York City, for example, residential areas like Sunset Park, situated in Brooklyn and East Harlem, Manhattan, businesses are performing extremely well and studies indicate that the businesses have performed much better than what they did in 2019. As compared to these areas, Hudson Square and Financial District that have many offices in the area are not performing well.
Bloomberg News reports that the smaller businesses faced greater difficulty when the pandemic started and it was seen that at least one among 4 smaller retailers has remained closed even after 6 months in the United States, in comparison to only one among the 12 retailers that are large enough. Minority-owned businesses have been hurt as well, especially harder.
Even though there are glitches, the spirit of new entrepreneurs has not been dampened. Reports also suggest that for the US small businesses in 2020, there was an increase of 86% as compared to the year before that, data indicates. Bloomberg News reports that this trend has been prevailing globally, with the same scenario in Germany, United Kingdom, and Brazil.
In the United States, reports suggest that the smaller businesses that bounced back were 8 times more than the bigger ones.
According to Bricklin Dwyer, who is the Chief economist at Mastercard and head of Mastercard Economics Institute, supporting the businesses around the neighborhood has been an important aspect during the pandemic. Even they have faced challenges since they heavily depend on local supply chains, local markets, and cash flows that are stringent. He also said that the sift to the virtual domains has opened avenues during the pandemic offering a silver lining, which is a resurgence for entrepreneurship and innovation.
Following shutdowns in March 2020, e-commerce proved to be a lifeline last year. The shutdown also witnessed many business entities migrating online and it was almost triple every month as compared to the pre-pandemic levels, the report by Mastercard said, Bloomberg News reports.
However, service-oriented business entities, in particular, still depend on “foot traffic”, although going back to office remains a distant possibility immediately.