A consumer survey by the International Council of Shopping Centers says 32 percent of Canadians believe economic conditions will improve 12 months from now, but 51 percent believe they will get worse, and eight percent think they will stay the same.
The sentiment is much more pessimistic than Americans as 49 percent of those south of the border said economic conditions would improve 12 months from now, 36 percent said they would get worse, and 10 percent said they would stay the same.
Improved economic conditions were most anticipated in British Columbia and Ontario at 36 percent with the Prairies the lowest at 23 percent.
“Such low levels of consumer confidence are a concern in consumer real estate circles where the recovery is expected to be a gradual improvement over time. Millennials and Gen X will lead the way in spending with physical stores, restaurants, and bars rated high on the ‘comfortable to visit’ scale,” said Michael Kehoe, Lead Ambassador in Canada for the New-York based ICSC.
“Malls and open-air shopping centres also scored high on preferred shopping venues to frequent after the COVID-19 crisis subsides. Consumer sentiment at 78 percent being more aware of the importance of small business in Canadian communities is a positive sign as small business will lead the way within any post lockdown recovery,” added Kehoe, a veteran of more than 40 years in the industry and broker/owner of Fairfield Commercial Real Estate in Calgary.
The survey of consumers also found:
78 percent said the COVID-19 crisis has made them more aware of the importance of small businesses in their community and therefore will support them more in the future;
73 percent said they are more likely to purchase from retailers/brands that helped communities/first responders during COVID-19 than those who did not;
66 percent said whatever purchases they had planned but could not make during the outbreak, they will make after it subsides;
61 percent said if small businesses in their community are forced to close due to COVID, it will be less convenient for them to get the goods and services they need; and
66 percent said they would feel comfortable visiting physical stores to buy goods within two months or sooner after the crisis subsides with 56 percent citing restaurants, bars or other eating places;
Bruce Winder, a retail analyst and consultant with Bruce Winder Retail, said consumers will respond in different ways depending on their personal risk tolerance, health, and specific economic situation.
“Risk averse customers or customers who could be more susceptible to the virus (seniors or those with pre-existing conditions) may avoid non-essential retailers until a vaccine is administered in one to two years,” said Winder, who is also author of a new book on Amazon called RETAIL Before, During & After COVID-19.
“Customers who are less risk averse or feel they are less susceptible will begin to shop in somewhat similar patterns as before the pandemic, while respecting an individual retailer’s revised protocols as it relates to metering, PPE (personal protective equipment) and cleanliness.
“Overall, I think we will see brick and mortar retail return to perhaps 60-90 percent of pre-pandemic traffic and sales levels for a little while but this will vary widely by retailer, category and target customer. Retailers have worked hard to facilitate transactions outside of brick and mortar stores through e-commerce.”
Winder said some customers will reduce spending as their income has been reduced and their job prospects are at risk, specifically as the Canada Emergency Response Benefit potentially runs out for some consumers.
“The question for many retailers will be whether they can survive under these new lower traffic sales and margins (retailers often make less money on e-commerce) levels once government supports dry up but before a vaccine is widespread,” he added.
The survey also found:
20 percent of consumers do not plan to cut back on spending while three percent said they will in the first month, 10 percent for one to two months; 22 percent in three to five months; 17 percent in six to eight months; 11 percent in nine to 12 months; and 17 percent to over one year;
New considerations among consumers include 69 percent saying they will be limiting direct contact with other people; 66 percent saying they will be practising social distancing; 41 percent saying they will be making expenditures on non-essential goods and services;
As for the top uses of federal stimulus money, 56 percent said to buy groceries; 45 percent to pay housing costs; 33 percent to put into savings; and 33 percent to pay off debt; and
38 percent of Canadians have received or plan to receive assistance.