Every Main Street Business Is A Hospitality And Entertainment Business
Main Streets have grown for 40 years. The next frontier for district managers and local business owners is to be hosts, performers and entertainers.
The Main Street movement, which has been active since 1980, has helped hundreds of communities to revitalize, offer attractive local economies for small businesses to open, and thriving places that promote diversity and welcome everyone.
With $101.6 billion reinvested locally, 168,693 net new businesses, 746,897 net gain in jobs, and 325,119 buildings rehabbed since 1980, the movement is one of the most powerful redevelopment tools in the country. The reinvestment ratio is 24:1, or $24 public and private dollars returned per each $1 invested by 1,200 Main Street programs.
All Main Streets are not created equal, however. Some have had tremendously effective leadership over the years at both the state and local levels, and together with local business owners, investors and developers, have taken their districts to the top of the rankings of best places to live.
Some are still struggling.
The way to support them, I argue in my new book, Main Street Mavericks, is to look at the district holistically. Support for each tier of local businesses in the ecosystem, from the top performers to the laggards, should be tailored, using a systemic approach.
Applying the Pareto, or 80/20 Principle, the top 20% of businesses would bring in 80% of foot traffic and drive 80% of sales in the district. Those businesses would benefit very little from programs designed to appeal to businesses across the table. Such programs, typically, will consist on façade grants, technical assistance or capacity building. Larger, more consolidated brands have larger budgets, and access to credit, design, business and marketing professionals of the highest quality.
What they need is a functional business ecosystem where their contribution to the place’s attractiveness is matched by enough of their counterparts that there emerges a synergy and the entire district becomes an attractive whole.
This ideal condition is less common than we would think. Top performing businesses are outliers and become anchors, carrying most of the burden of attracting foot traffic. It is, nonetheless, a condition that can be easily subverted. The extra push that most local businesses need to rise to the top tier is usually light, yet not so easy to identify. That is, in my not humble opinion, the value of the categorization and tier system introduced in Main Street Mavericks. Click on the chart below to download a hi-res chart.
To aid in increasing the output and attractiveness of mid tier businesses, or Stabilizers, to match the top performers, or Attractors, a collaborative approach that positions the top ones as mentors and the ascending ones as receivers of wisdom and lessons, can teach owners about good service, good design, profitable business models and the road to creating a great product.
To help the top performing businesses we need to work hard. They already have great Product-Market fit, a working value proposition, great service, and great looking brick and mortar and digital storefronts. They are growing. The one thing they do not have is a foothold in the new economic paradigm, which can galvanize them to the onslaught of giant chains and online retailers.
Those giants dominate the financial game. It is easy for massive operations that can afford to play a financial game to win over small local operations that cannot rely on accountants, standardization, volume sales and economies of scale.
What they have working for them is a unique combination of Place, scale and “propinquity” (PSP). In social psychology, Propinquity refers to the state of being close to someone or something in proximity, both physically, psychologically, and metaphorically. It often implies nearness in location, time, relationship, or similarity of nature.
PSP is what makes local businesses very hard to compete with. Standardization is a countervalue on Main Street. Economies of scale do not play out on human-scaled Main Street. Large businesses resort to price and convenience. Local businesses are more expensive.
This would be a big T in the SWOT, but as it turns out, for businesses that operate very close to their customer base, and choose to transform into experiences, charging a premium is no problem, if the product they deliver is spectacular.
According to PwC, 16% of consumers are willing to pay more for outstanding experiences. The Temkin Group found that loyal customers are 86% more likely to buy again and 77% likely to recommend and 62% likely to forgive a poor experience. The value of PSP is strong.
This brings us to the Big O. On the SWOT. The Opportunity.
The Experience Economy represents a modern shift in how humans interact economically. It progresses through distinct stages. Initially, there's the exchange of simple commodities, like raw agricultural products or petroleum, lacking added value. The next stage involves products derived from these commodities, such as frozen fruit or gasoline. Moving forward, we enter a service economy, where services dominate and advanced activities like accounting and marketing play significant roles alongside basic production processes. In the Experience Economy, however, the delivery of goods or services becomes the product itself. Here, the emphasis shifts to the quality of interaction with the brand and the intrinsic value of the relationship, transcending mere transactions. Sales naturally follow, facilitated by a variety of user-friendly channels offered by companies.
Joe Pine and Jim Gilmore wrote “The Experience Economy” in 1999, where they compiled these ideas, which inspire the diagram above. Note that there are several scales layered in the graphic:
Customization vs. Commoditization, where the higher levels of complexity require tailoring of experiences, and the lower ones accept standardization.
Time, where in the lower tiers the value lies in saving time, in the upper ones the value lies in spending time well. This is the concept of “Time Preference”: a higher time preference requires speed in transactions, while a lower time preference values quality over speed.
Pricing, where the more standardized and higher time preference looks for lower prices, and the more customized and lower time preference incorporates a premium in exchange for great experiences.
Back to the Opportunity. Businesses in the top tier, the Attractors, have great product, value proposition, design, and operations. They are ripe to offer time well spent and become part of the Experience Economy.
As much as they might have going for them, these businesses are nonetheless small. Their budgets are not enough to bring design teams that can create and implement experiential offerings and the change their operation would require to transform the storefront into a showroom and leave the bulk of sales for online and other channels is not within the reach of most.
This is where the coordinating abilities of the district managers comes in handy. Their job is to weave together the small experiential contributions of individual businesses, and complement them with more profound experiences offered at the district level.
Pine and Gilmore subtitled their book “Work is theater and every business a stage”. I paraphrased them in the Second chapter of Main Street Mavericks: “Main Street is a Festival and Every Store is a Stage.” Each street-facing business on Main Street acts as an attraction in an amusement park, and the streets, alleys and squares of the district act as the social spaces.
One of the characteristics of amusement parks is the outstanding hospitality they offer to each one of their guests. The main transformation that Main Street businesses need to make in order to upgrade their district to the Experience Economy is to start looking at themselves as hospitality and entertainment businesses first, and a restaurant, gift shop or record store second.
The niche for experience creators, producers, and marketers in the Experience Strategy sphere is wide open. The opportunity for Main Street to capitalize on the immense value that experiences can bring to their town is waiting. Will they seize it?