Lockdowns ahead of Black Friday a blow to small retailers

New lockdown measures in the second wave of the novel coronavirus pandemic will deal an especially hard blow to small and independent retailers, experts warn.

On Friday, the government of Ontario Premier Doug Ford announced sweeping new restrictions to combat the recent surge of COVID-19 cases in Toronto and Peel Region, including a temporary ban on in-store shopping for non-essential retailers. The closures will take effect on Monday, ahead of the Black Friday holiday shopping weekend.

Similar rules are currently in place in Manitoba and Nunavut. And as case counts continue to climb, especially in larger cities, more consumers may find they need to bring their holiday shopping entirely online.

A lack of foot traffic would be an especially hard blow for small retailers, says Myles Gooding, national retail and consumer lead at PwC Canada.

Where it hits the hardest is your small- and independent-type retailers, those that really depend on footfall or physical traffic.” 

Small retailers already suffered a 20 per cent drop in revenue on average over the spring lockdown, Gooding says.

“That’s not really a reduction in revenue that most small independent retailers can afford during the holiday season,” he adds.

A holiday-season survey conducted by PwC in August showed consumers’ online purchases would likely outweigh in-store buying this year. But visits to brick-and-mortar retailers were still expected to make up a significant slice of overall shopping, with 60 per cent of those aged 55 and up planning to do at least three-quarters of their holiday buying in stores.

PwC expects Canadians will spend an average of around $1,100 for the 2020 holiday season. That would be 31 per cent less than in 2019, but most of the decrease is expected to come from cuts to travel spending, according to the survey.

Still, a looming question for independent retailers is how much of that money will flow to them if pandemic-linked restrictions keep a growing number of consumers from browsing their wares in store.

While many small businesses have embraced e-commerce since the start of the pandemic, the challenges of competing in that space remain significant, says David Beaudet, co-founder and senior partner at LIDD, a supply-chain consulting firm.

Building a website and digital storefront is only one part of what goes into building an e-commerce business, Beaudet says. For example, setting up the technology to track inventory levels in real time — making sure customers can only order what is actually available — remains a “big hurdle” for smaller retailers, he says.

And e-commerce also comes with a host of offline challenges, Beaudet says, from storage through the ability to prepare orders and ship them out the door to finding delivery options to get the goods to the consumer.

With Canada Post and major logistics providers like UPS, FedEx and Purolator already facing record demand, smaller retailers will have to get creative when it comes to the delivery side of the equation, says Gooding.

One way to offset that is to resort to curbside pickup, which “allows their customers to avoid the angst of whether the product is going to be delivered or not,” he says.

But curbside pickup comes with its own set of headaches for retailers, Beaudet says. Making sure customers swiftly receive their online orders while waiting in their cars is no easy feat, he adds. There are still storage and inventory-tracking challenges, not to mention — often — the need to train employees on entirely new workflows.

It doesn’t help, also, that many consumers used to ordering on Amazon have come to expect features such as same-day or next-day delivery, he says.

“For smaller retailers to try and imitate or meet the same kind of service levels as Amazon is a losing battle,” he says.

Still, smaller retailers can compete by focusing on higher-margin items and educating consumers about why the online shopping experience is different when they buy local, he says.

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