Since 2022, we’ve been providing predictions for the year ahead to better understand the accelerated changes in society, technology, and the economy, and the anticipated impacts on our Main Streets and small businesses. While not an exact science, I hope this offers insight into how, at the intersection of diverse trends, new insights can emerge to inform strategic adaptation and maintain agility in our work.

Before we look ahead into 2026, here’s a review from last year: 

1. Win: I predicted that overall retail growth would be less than 3 percent. While the numbers aren’t in, projections suggest 3 – 4 percent year-over-year growth. But my number was more based on adjusted inflation, or frankly, real growth that hits the bottom line. Inflation can really deceive us when it comes to growth and certainly margins. With CPI at a relatively consistent 2.7 percent, real retail growth was fairly stagnant in 2025.
2. Loss: I was too early on the impact of GPL‑1 drugs on everything from food menus to gym memberships and apparel. I was just a year too early: the National Retail Federation’s 2026 trends and predictions article makes the exact same acknowledgement of GPL‑1 drug impacts. 
3. Draw: I suggested fairly strong impacts of AI adoption on non-profit organizations like Main Street programs. Our latest director’s survey shows that AI adoption is higher than among Main Street businesses, but most programs are using it for capacity building rather than for my predictions around data collection, fundraising, and reporting. Main Street directors are incredibly creative, talented, and resourceful, so I anticipate further evolution involving AI technology and Main Street!

Looking ahead to 2026, I expect some of the trends I identified in 2025 to intensify, as well as the emergence of new trends that will have significant impacts on Main Streets and small businesses. Here are my eight predictions for 2026.

1. Big Impacts from the K‑Shaped Economy

If you aren’t familiar with the term ​“K” Economy, it essentially refers to an economy that benefits higher income earners, while middle- and lower-income groups experience stagnation and/​or decreases. This creates an economy that relies on a much smaller group of consumers to fuel growth. You also see this disparity represented in commentary around Wall Street versus Main Street. This prediction rests on assumptions that a strong stock market in 2026 will be fueled by lower interest rates, while AI adoption and the consequences of a tariff war will lead to further job stagnation.

Under this economic scenario, we should expect:

• Upper-income households feel more confident in driving spending
• Lower-income individuals see little hope for income growth or the ability to pivot, and will have lower spending
• Result: Deals demonstrating good value win the day for both higher and lower income consumers

Companies with fewer than 50 employees shed 120,000 jobs in November 2025, according to data from payroll processing giant ADP. Factors impacting this include limited ability to execute on AI to increase capacity, margin pressures from inflation and high prices, and persistent uncertainty. 

2. Big Shifts in Social Media

Social media has had a mixed, complicated effect on society and communities, and many of those issues are coming to a head this year. These changing attitudes and laws will significantly impact Main Streets and small businesses. 

There are many factors driving this prediction. Overall, there is growing dissatisfaction with social media’s impact on discourse and a greater desire for in-person connection. The UK and Australia are passing new laws restricting social media use among children. Young people are drinking less alcohol, and research shows a correlation between alcohol consumption and social media use. 

As a result of these shifts, I fully expect that experiential shopping and third spaces (or as I call them, Plug-In Spaces) will benefit from this pull-back as people crave connection and community. However, how we reach consumers may need to shift as more consumers tune out of social media and media continues to be hyperpolarized by changes in ownership. Your website, Google profile, and ability to connect with your consumers for word of mouth become even more important. 

3. Opportunities for Main Street Small-Scale Manufacturers 

There are some very significant policy and event-related activities that I think will highlight this particular sector of our Main Streets. First is America 250, the celebration of America’s 250-year anniversary. What’s more Americana than to celebrate where manufacturing got its start in the USA – Main Streets! This, combined with trade isolation, creates opportunities for small-scale manufacturers to enter the market on Main Streets. At Main Street America, we will launch a new program to support small-scale manufacturers on Main Streets. 
 

4. Younger Generations Gain Importance

As boomers age, Millennials and Gen Z will drive higher spending and broader shifts across retail sectors. Businesses and Main Streets will need to focus their marketing and outreach efforts to the needs and tastes of these younger generations. 

5. New Options for finance and ownership structures for small businesses 

There are several signs pointing in this direction. First, there are the well-documented challenges for individual asset ownership by Millennials and Gen Z. Second, we are in the midst of the largest transfer of wealth in American history. With opportunity and demand, there will be both policy and programmatic pushes for more creative finance structures. A great example is our work with customer capital platform NuMar​ket​.co. 

In addition, we anticipate growth in small businesses and real estate ownership structures such as co-ops, Employee Ownership Trusts (EOTs), and owner-financing models, with a focus on building resilience within small businesses to remain competitive. 

6. E‑Commerce Moves to Brick-and-Mortar

Over the past five years, we have seen a growing number of large direct-to-consumer brands launch initiatives to open physical stores. However, this represented a small share of the DTC landscape and was primarily driven by aggregators such as Amazon and Wayfair. This year, momentum among smaller brands is even greater. Many popular online brands like Warby Parker, Allbirds, Glossier, Bonobos, Brooklinen, Skims, Away, and Vuori are successfully moving from purely Direct-to-Consumer (DTC) models to opening physical stores, using brick-and-mortar locations as showrooms, customer engagement hubs, and brand-building tools, rather than just sales points, to create deeper customer loyalty and reach new audiences. Some of the reasons why:

1. Increased expense in customer acquisition: According to Loyalty Lion, between 2023 and 2025, there was a 40 percent rise in acquisition costs
2. Online has become a race to lowest price 
3. Consumers across the spectrum want more of a leisure and experiential form of consumption, especially as disposable dollars become a challenge
4. Society as a whole is craving community – successful retailers are those that not only sell a great product but are providing social engagement and belonging

7. Changes coming in the Food and Beverage Sector 

Biohacking is a do-it-yourself (DIY) approach to optimizing your health, well-being, and performance by using science, technology, and self-experimentation to make intentional changes to your biology and lifestyle. A 2025 Gallup poll found that only 54% of U.S. adults consume alcohol, the lowest level in nearly 90 years, down from 62% in 2023 and 58% in 2024. And the decline is most pronounced among 18 – 34-year-olds, with only half reporting drinking, down from 59% in 2023. This data, coupled with the growth of inhibitors like GPL‑1 drugs (which depress cravings/​desires), will likely lead to sizable decreases in the demand for restaurants and/​bars that predominantly depend on alcohol for sales. 

Now, as one market declines, logic would suggest a corresponding rise in alternatives, such as late-night coffee and non-alcoholic venues. And finally, increases in Alpha-Gal (a food allergy resulting from a particular tick bite) combined with rising beef prices result in changing menus and new start-ups focused on non-beef meat options and vegetarian/​vegan options.

8. Circular retail migrates to more sectors beyond Apparel

A circular economy in retail shifts from ​“take-make-dispose” to a closed-loop system, keeping products and materials in use longer through reuse, repair, refurbishment, and recycling, reducing waste and reliance on virgin resources. It not only represents a more sustainable business model but is also a smart way to diversify revenue streams without a significant increase in costs. 

As a result, you can achieve higher margins by increasing customer volume by providing unique points of product engagement. E.g., an outdoor recreation store that sells bikes, does repairs, takes trade-ins, fixes up old bikes for resale, repurposes bike parts for resale, and even provides equipment rental services. 

2026 is the Year of Small Business!

These trends show great needs — and great opportunities — for small businesses and Main Streets this year. I have seen the latest data from the yet-to-be-released 2026 Main Street Directors’ survey, and the top programming priority for 2026 is ​“supporting businesses and entrepreneurs.” In addition, respondents report that small-business programming had the greatest impact in their community among all the programs they offer. 

Main Street America has an exciting suite of resources and support coming this year, including the Small Business Hub, Made Originals programming, ongoing small business grant programs, NuMarket’s customer capital platform, and the Hartford Small Business Accelerator program. I believe 2026 is the year Main Street programs firmly cement their support for small businesses with fewer than 50 employees!

Do these predictions match what you are seeing on the ground in your communities? We would love to hear from you. Head on over to the Member Hub to start a discussion and share your own thoughts and predictions for 2026. 

Want to dive deeper into these predictions? Check out the Main Street Business Insights podcast!