Despite 'support local' rallying cry, experts fear a surge in small business bankruptcies in 2021
EDMONTON -- Despite increased calls for Canadians to support local businesses this holiday season, experts fear large international retailers will still dominate during Black Friday and Boxing events, leading to a surge in small business bankruptcies in the new year.
Though bargain hunters in Toronto and Montreal were still seen lining up outside of big box retailers Friday, analysts say the massive shift to e-commerce has left small and medium size businesses scrambling to keep up.
“When the pandemic hit, a lot of small-to medium-sized retailers did the best they could. They launched e-commerce sites, they launched services like click and collect – they sort of cobbled together what they could,” Doug Stephens, author of “Resurrecting Retail: The Future of Business in a Post-Pandemic World,” told CTV’s Your Morning on Friday.
“But there’s no question that the larger international players are going to dominate this holiday season. Smaller retailers may manage to cling and hang on… but this, by no stretch, is going to be a successful holiday season for small to medium sized business.”
Yet despite social media being littered with posts urging users to “shop local,” Stephens isn’t the only expert painting a bleak picture for independent businesses.
According to Canadian Federation of Independent Business’ (CFIB) latest data, only 38 per cent of small retailers are making normal sales, leaving one in seven at risk of permanent closure.
The picture is even worse for hospitality businesses. According to the CFIB, one in four are at serious risk for closure and just nine per cent are making normal sales.
“The fear has always been that if we got to this point in the year without having flattened the curve, that the combination of the cold weather, consumer fears around the economy and job insecurity could make for a very difficult time,” Stephens said.
“I would expect that we are going to see a state of bankruptcies in the new year.”
Yet as the pandemic pushes more Canadians towards online shopping, experts note it’s not as easy for small business to embrace e-commerce.
“It’s all about having an online presence. And if you don’t have one, you’re scrambling to figure out how you can get one,” CTV News’ Chief Financial Commentator, Pattie Lovett-Reid, told CTV’s Your Morning Friday.
The CFIB says 152,000 small businesses have entered the e-commerce market across Canada since the pandemic began.
But while one in five businesses say they increasingly rely on online sales to survive, a quarter of those using e-commerce are struggling to generate revenue via online sales.
“I would just encourage everyone to understand that it’s the small- and medium-sized retailers in our communities that really give texture, character and culture to the areas we live in,” Stephens noted.
“With all due respect, it’s not the Walmarts or the Home Depots of the world that make our retail scapes interesting. So, anything consumers can do to reach out to those small businesses and help them through this time is going to pay dividends when we get through this.”