Worcester Business Journal

8 Worcester Business Journal | February 20, 2023 | wbjournal.com BY ISABEL TEHAN WBJ Staff Writer T he struggles for small business owners everywhere over the past few years are not letting up in Worcester. For retailers in the city, changing consumer attitudes, economic conditions, and a challenging landscape have made for a hostile environment not suited to growth or success. During COVID-19, consumers were attuned to the issues plaguing small business owners, who oen had to com- pletely close for months, pivot to online operations, or starkly reduce capacity. Emerging from the pandemic, however, business owners are dealing with chal- lenges posing more serious threats to keeping their doors open and lights on than the most challenging days of 2020. "Business is increasingly more difficult now than it was during the pandemic," said Lynn Cheney, owner of Maker to Main, a downtown Worcester specialty and local grocer. Cheney is far from alone in this as- sessment. A smaller portion of retailers in the state closed during the pandem- ic than the Retailers Association of Massachusetts predicted, said Jon Hurst, president of the association. Estimates were that a third of its 4,000 member re- tailers would not make it through 2020, Hurst said, but it was less than 10%. is does not paint the full picture of the landscape for retailers. "It's been one thing aer another for three years," he said. For Jessica Walsh, owner of the Worcester Wares gi shop, one thing aer another has caused her to pull back on her operations. Walsh opened her first location at the DCU Center in 2015 and later launched a second location at the Worcester Public Market in early 2020, right before she was forced to shutter in-store shopping during the pandemic. On March 19, Walsh will close the Kelley Square location at the public market and return to operating solely out of the DCU Center to cut back on costs and improve her margins. It was a difficult decision for Walsh, who had the first business to open in the Worcester Public Market. "Businesses there have heart," she said, "but I can't continue the gamble." Worcester Wares adjusted during COVID, but an increasingly clear pic- ture of the landscape appeared to Walsh in early 2023. "You get through the pandemic. You take out the loans. You adjust to a new reality. You go back to normal, and you start to see how different everything is," she said. "I realized the adjustments weren't temporary. You can't go back to the way things were before." Rising costs, decreasing margins Despite rising inflation, U.S. consum- er spending remained high through- out most of the last two years before dropping in November and December, according to data from the U.S. Depart- ment of Commerce. Falling consumer spending, which comprises about two- thirds of the American economy, creates problems for small retailers. However, low unemployment rates remain a strong point for the economy. Both the statewide rate and the Greater Worcester rate were at 3.3% in Decem- ber, both near all-time lows, according to data from the U.S. Bureau of Labor Statistics. Despite con- sumer spending remaining high until recently and unemployment being low, the costs of operations for small business- es have increased across the board. Even if a retailer has successful sales and rising profits, it may not be enough, said Hurst. "It's all in the margins," he said. "It's a struggle to remain profitable." Because of these factors, Bill Laudon, who owned Alan James Co., a maker space and retail shop selling custom leather goods in the Worcester Public Market, had to close his shop. "To be honest, I should have closed almost a year ago," he said. Inflation was a primary concern for Laudon. It drove up his prices and made consumers less willing to spend on non- essential goods. e Alan James Co. closed on Jan. 27. Laudon is not looking for a new location at this time. "Selling non-necessities in a place where the middle class lives, it doesn't work out," he said. Inflation had been rising at nearly a 10% year-over-year increase each month since 2021, as the Federal Reserve has been increasing interest rates in an attempt to get it back under control. e rate of the increase of inflation in the U.S. did slow slightly to about 6% in January, but it is still far off the Fed's targeted goal of 2%. For Walsh, the increasing cost of goods causing a shrinking of her margins was a major reason she made the decision to close her second location. Every item costs more for the business, said Walsh, who estimates it is now three times as expensive to operate Worcester Wares as it was in 2019. "My prices can't reflect those increases," she said. "People won't pay them." Polar Park's impact Walsh and Laudon both closing their businesses in the Worcester Public Market in 2023 followed a rash of PHOTOS | EDD COTE Retailers in trouble Aer surviving 2020, Worcester retailers are closing their business or reducing operations in the face of mounting problems in 2023 Lynn Cheney, owner of Maker to Main Jessica Walsh made her DCU Center storefront the base of Worcester Wares' operations when she rolled out full online inventory during COVID. Very likely to close .......................... 32% Likely to close .................................. 33% Unlikely to close .............................. 18% Very unlikley to close ...................... 11% Unsure ................................................ 6% Inflation impact on small businesses In November, the small business advice website Digital.com surveyed more than 1,000 U.S. businesses with fewer than 500 employees about the impacts of inflation on their operations. Percent of small businesses considering closure if high inflation rates continue Source: Digital.com

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