Downtown Retailers and Businesses Struggle in Canada Amid Lack of Office Workers and Tourists

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Most small businesses in Canada continue to struggle with sales but the COVID-19 pandemic has hit downtown cores particularly hard with significantly fewer urban businesses back to making normal sales than rural businesses.

COVID CONTINUES TO IMPACT URBAN BUSINESSES HARDER THAN RURAL COUNTERPARTS

New survey data by the Canadian Federation of Independent Business found that 22 percent of businesses in large urban centres report making normal sales for this time of year compared to 37 percent of businesses in rural areas.

“Typically, we wouldn’t expect to see businesses in urban centres struggling to find customers. But with downtown offices empty and international tourism dead, these businesses are really hurting and more at risk of permanent closure,” said Laura Jones, Executive Vice-President at CFIB, Canada’s largest association of small and medium-sized businesses with 110,000 members across every industry and region. “Consumer spending is the key to survival for all businesses.

“One of the things downtown businesses count on is a lot of people moving around downtown. You don’t think of downtown businesses as being worried about having customers available because downtowns are typically crowded but with COVID-19 there’s kind of a double whammy going on. The first thing is a lot of office buildings have been emptied out. Some have a handful of workers going in but many are still not going back to their offices. So if you’re a coffee shop downtown on the corner that relies on the traffic from those office buildings, a typical weekday morning you’d be quite busy but now you’re empty or almost virtually empty.”

LACK OF TOURISM IN DOWNTOWN CORES CAUSE FOR MAJOR CONCERN

Also hitting downtowns quite hard is tourism — or the lack of it. For major cities like Montreal, Toronto, Vancouver, Ottawa, and Calgary, many businesses, particularly at this time of the year, reap the benefits of visitors spending money in their communities. But that obviously is not happening this year.

Going forward, the big question is the impact that the increasing trend to remote working will have on downtown office space and how that will hurt businesses located in the cores of urban centres.

A report by the Downtown Vancouver Business Improvement Association clearly shows the impact COVID has had. Pedestrian traffic along downtown’s retail corridors (e.g., West Hastings, Granville and Alberni streets) has increased 45 percent from April to June. However, June pedestrian traffic was at around a third of the levels it was in 2019.

The numbers are actually staggering. The total downtown pedestrian counts in April 2019 were 478,000 but dropped to 110,000 this year. In May 2019, they were 510,000 and down to 118,000 this year. And in June 2019, they were 495,000 and down to 160,000 this year.

Charles Gauthier, President and CEO of the Downtown Vancouver BIA, said there is a return of downtown workers as time goes by but it is slow going.

“It is definitely having an impact on retail, on restaurants and our personal services sector. The more prolonged that goes it is going to threaten, from my perspective, the viability of a lot of those businesses,” said Gauthier.

“What’s kind of interesting is one thing I’ve been told is that the weekend traffic to the downtown retail is quite strong. To some extent, that’s helping some of the retailers kind of weather the storm. If you add the lack of tourism and hospitality and what would traditionally be our peak season, it’s the perfect storm.”

CANADIAN URBAN RETAIL AFFECTED BY WORK-FROM-HOME MOVEMENT IN WAKE OF COVID

Gauthier said he does worry about the impact that remote working will have on office space in the downtown core and how that will sustain the growth of all urban centres across Canada if that happens.

“But I don’t have a crystal ball and we’ve never been through this before. It really is going to be interesting to watch what happens. But a number of our members are still quite bullish about downtown. It’s just that the road to recovery is going to be long,” he said.

“Downtown has so much to offer. We have close to 100,000 people that live downtown. There’s more rental accommodations being built in close proximity to downtown. I still feel, and once tourism bounces back and it’s anyone’s guess when that will happen, it will bounce back but it will look different. I just don’t know what that will look like.”

John Kiru, Executive Director of the Toronto Association of Business Improvement Areas, said any downtown major urban centre across the country is dealing with the same issue.

“The downtown has become the proverbial hole in the donut because a lot of people are working from home and as a result not coming in and many of the businesses in the downtown cores are built on that transfer of a few thousand people or hundreds of thousands of people in Toronto’s case of coming in on a commute daily to work,” said Kiru.

“That morning coffee. That morning breakfast. The lunch. And maybe staying on to do some shopping before commuting back. It’s those sort of impacts that are out there that have had significant impact. When the university is doing online courses, those thousands of students that go to Ryerson University or U of T for that matter the businesses that have built around those campuses, depending on those students and professors and the college/university life, are left with really nothing to draw against with the exception of the odd visitor down into the core.

“It is the fundamental way that businesses have been built within the inner core and the dependency is having a significant impact.”

What has helped is the growing densification of some urban centres such as Toronto where more people are choosing to live in the downtown core, but Kiru said even with that it’s not enough to offset the exodus of the jobs from the inner core.

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