Downtown businesses struggle as former customers work from home
By ZHOLDAS ORISBAYEV
Capital News Service
This story was published in The Detroit News and Ludington Daily News.
LANSING — Michigan downtowns are entering into long-term trouble, business experts say.
“It’s not visible yet, but it’s clearly coming,” said Rob Fowler, the chief executive officer at the Small Business Association of Michigan.
A key challenge is that downtown businesses lost a significant portion of their profits as the pandemic meant thousands of white-collar workers have been working remotely since March, Fowler said.
“Blue Cross Blue Shield of Michigan said their employers can work remotely through 2021 and employees of DTE and Consumers Energy are staying remote at least through June 2021,” he said.
General Motors and Ford Motor Co. say their white-collar workers will not return to their workplaces until the end of June.
Moves like those mean that thousands of employees — and potential customers — are no longer in Michigan downtowns, Fowler said.
“Many businesses are reconsidering their office spaces as a portion of their workforce can permanently be remote, which decreases the consumer base of downtowns,” he said.
Empty commercial real estate offices are skyrocketing, he said. ”It’s preventing the resurgence of downtowns, especially in Detroit and Grand Rapids.”
About 47% of Michigan’s small businesses have lost at least one employee since February, according to a recent survey by Fowler’s group. And 75% of them expect sales to be down. About 10% of small business owners think that they cannot make it.
“Our September survey showed that 42% believe that they cannot be profitable in the current environment,” Fowler said.
Local business groups are fighting back.
Commercial real estate is not in demand at the level of the pre-pandemic period, but it can adapt to the new business environment, said Lindsey Dotson, the director of the Charlevoix Main Street Downtown Development Authority.
“Office spaces are obsolete, and we are thinking of how those spaces can be adapted to continue to generate profit,” Dotson said. “Currently, we have two commercial real estate companies in Charlevoix downtown in a process of converting those empty spaces into housing units, as we have a huge shortage in affordable housing.”
The authority owns and operates a coworking space called The Vault in downtown Charlevoix that has been generating more profit than it had in 2019.
“If you live 6 miles away out of town, you can’t set up Wi-Fi at home,” Dotson said. “Coworking spaces in large urban areas are doing terrible due to the pandemic, but spaces in small towns are still in demand because of the internet access issue in rural Michigan.”
Avoiding social isolation attracts people to coworking spaces and many students use the space to attend online classes.
Other Charlevoix businesses have created e-commerce websites and delivery services to do business in different ways due to the pandemic, she said.
Many downtown retailers are taking creative approaches to selling their products.
“One of the creative initiatives done by Downtown Lansing Inc. is virtual window shopping, where customers can purchase their product through scanning QR codes,” said Meegan Holland, the vice president of communications and marketing for the Michigan Retailers Association. “They are bringing out-of-town retailers to fill empty storefronts with their products’ pictures and scannable codes on the side.”
Partnered with Michigan Premier Events, Downtown Lansing Inc. launched the Lift Up Local campaign where they recruited ambassadors and armed them with gift cards to encourage people to shop small downtown businesses.
“We’re challenging Michiganders to tell their friends and family that they want this year’s gift to come from a local retailer,” Holland said.
“Buying from your favorite Michigan store this year will help them make it through this tough time and be there for you next year,” she said. “Sure, it’s convenient to send shopping dollars to online stores that are not located in Michigan. But that is not helping our economy and market at all.”
The state order limiting customers to 30% capacity is difficult, she said. “If your capacity is 10, then you can only have three people in the store, including you and your salesperson.”
Holland also said that some retailers in urban areas of Michigan haven’t opened their doors since the shutdown as they feel it’s not safe for them to do so yet, but they are still in business.
“They are doing Facebook Live videos to keep their customers updated and they are serving them now to sell later,” she said. “And northern Michigan tourist cities had a great tourism season this summer as Michiganders preferred to travel in-state due to the COVID-19 restrictions in other states.”
She also said that Petoskey had a September similar to July, as it was slammed with tourists, like many northern cities in Michigan.
“Every community in Michigan has done some of community outreach events or campaigns to keep downtown vibrant,” said Cristina Sheppard-Decius, a committee chair of the Michigan Downtown Association, a Grand Haven-based nonprofit organization that works to create vibrant community centers and downtowns across Michigan.
A quarter of local business annual profits comes from holiday season sales in December, she said.
“Every business is worrying about holiday sales outcomes and they are on the wire right now,” Sheppard-Decius said. “We are coming to the biggest sales season and downtown retailers depend on the outcome of it more than ever.”