Independent business owners threatened as revenue divide between them and big companies widens
Over the course of this year, one recurring theme in the news has been how COVID-19 has exposed and deepened divides between specific groups, including low- and high-income households, minorities and non-minorities, and older and younger Canadians. And according to a new survey by the Canadian Federation of Independent Business (CFIB), that same story could be playing out for small-business owners.
According to CFIB, nine in 10 small businesses say Canada’s independent businesses are being threatened by the sheer market power of big businesses selling online, such as Amazon. While large online retailers have enjoyed considerably more revenue compared to last year, the majority of small retailers (62%) are still below normal revenues. All in all, CFIB estimates one in seven independent retailers could close permanently before the end of the pandemic.
“Small and big businesses didn't enter the pandemic on a level playing field and things have only gotten worse,” said CFIB President Dan Kelly. “During lockdowns, big box stores like Costco and Walmart were allowed to remain open and sell all kinds of goods because they have grocery sections, while many small businesses were shut down.”
This dynamic of divergence has the potential to accelerate in the lead-up to holidays, CFIB said. Citing new public opinion research from Maru/Matchbox, it said Canadians are planning to spend two thirds of their holiday budgets at big businesses.
In its own 2020 Canadian holiday outlook, which draws from a survey of retail consumers, PwC Canada found that the pandemic has had a negative impact on 57% of respondents’ spending capabilities relative to 2019. In line with a new report from Deloitte, respondents to PwC’s survey said they plan to cut back on holiday travel and leisure spending.
Gift budgets are expected to stay flat, PwC said, averaging $630 this year compared to $647 last year. Concerns surrounding health, safety, and convenience are pushing Canadian consumers to do more of their shopping online, PwC said. Those same concerns were prevalent among respondents planning to make in-store purchases, with more than three fourths agreeing with statements such as “I just want to purchase my items as easily as possible (80%) and “I plan to do my holiday shopping in places where I can see measures are in place to ensure the health and safety of shoppers” (78%).
That secular trend in demand puts many small businesses at a disadvantage, as it would force already cash-strapped independents to spend more on improving their digital marketing and sales capabilities, as well as making the in-store experience as safe and convenient for customers as possible. With that in mind, CFIB reiterated its call for consumers to support small business as they do their holiday shopping.
“Most of us don't think too much about where we shop … we may overlook the hundreds of small businesses around us that offer fantastic products and services while creating jobs and giving back to our communities,” said Laura Jones, executive vice-president at CFIB. “When we choose to shop local, we choose to keep the money we spend in our economy, to support Canadian jobs and to invest in the businesses that make our communities vibrant. It's a choice we can all feel good about.”
