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Digital Transformation Required to Keep Canada’s Retail Afloat: Expert

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By Dr. Yu Ma, Associate Professor of Marketing and Bensadoun Faculty Scholar at McGill University

As the second wave of the COVID-19 pandemic sends Canadians ducking for cover, we are become increasingly aware of a grim reality: COVID is not going anywhere, at least until we have a vaccine.

Dr Yu Ma
Dr Yu Ma

While the Amazons and Costcos of the world have only increased their sales as consumers make their purchases online, Canada’s small businesses are struggling mightily to weather the storm. According to the Canadian Federation of Independent Businesses (CFIB)’s Small Business Recovery Dashboard, only 30 percent of Canada’s small businesses are currently hitting normal sales numbers. One in seven small businesses, particularly those in the arts, recreation, and hospitality sectors, are at risk of closing their doors permanently. In light of the fact that Canada’s small businesses comprise 98 percent of all businesses and employ 8.3 million people, it’s no wonder that the retail sector as a whole experienced significant challenges over the summer.

The Race to Digitize

With no end to the pandemic in sight, the most significant barrier that many Canadian businesses face is the urgent need for digital transformation. Businesses with an online presence and robust digital operations entered the pandemic with a distinct advantage. They are more efficient in that consumers can buy from them at any time or any place. They are more transparent as customers can easily track their products from the point of sale. They are also safer, allowing for transactions without any personal contact.

In May 2020, retail e-commerce sales in Canada reached a record $3.9 billion, doubling total sales from February. The rapid shift in consumer habits has widened the gap between businesses with an online presence and businesses who are still relying entirely on brick-and-mortar locations. For the brick-and-mortar only group, establishing a strong online presence will be increasingly vital for survival.

On top of the challenge of rapidly digitizing, businesses are also forced to navigate major disruptions in supply chains and plan manufacturing capacity for an uncertain future. Those who fail to overcome these hurdles face mounting losses and inefficiencies. Turnaround management, the process of pulling businesses back from the edge of insolvency, has taken on new relevance in the age of COVID-19.

Help is Here

Canadian business does not have to struggle alone. Partners in the private sector, government, and higher education have the capacity and the interest in making a tangible difference for local retailers. In the private sector, for example, e-commerce giant Shopify has teamed up with the Canadian government to launch a new initiative called Go Digital Canada, which offers courses, resources, and consultants to help small businesses create an online presence.

On the government side, local and provincial governments have stepped up support for struggling retailers as well. In Quebec, the provincial government is directing funds toward organizations like Le Panier Bleu, which actively connects Quebec consumers with local products and businesses.

While government and private sector partners are effectively meeting the needs of retailers in the short term, they are less focused on providing solutions to the long-term challenges that retailers face. The higher education community, on the other hand, is perfectly suited for the task.

Photo of Book City sign advertising alternatives to in-store shopping amid COVID-19 pandemic. Photo: Dustin Fuhs
Photo of Book City sign advertising alternatives to in-store shopping amid COVID-19 pandemic. Photo: Dustin Fuhs

Both now and into the future, Canada’s retailers will continue to face the complexities of digitizing their operations, maintaining an online presence, and building more resilient supply chains. The COVID-19 pandemic has inspired a renewed commitment to educating the next generation of retail leaders. My colleagues and I recently launched a new Master of Management in Retailing degree that emphasizes digital transformation in order to prepare students to lead in an increasingly complex retail landscape.

Even when COVID-19 is finally a distant memory, the retail sector will face another challenge, and another after that. As they continue to fight to remain competitive at this unique moment in time, Canada’s retailers have a capable and willing partner in the higher education community.

Dr. Yu Ma is Associate Professor of Marketing and Academic Director of the Masters of Management in Retailing at McGill University’s Bensadoun School of Retail Management. He obtained his PhD in management from Olin School of Business, Washington University in St. Louis. His research interest includes food marketing, retailing and big data analytics. He also examines broader marketing issues such as the influence of macro environment on the retail sector and the impact of food marketing on population health.

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1 COMMENT

  1. There is a really great Canadian tech story to drive the shop local movement. A technology that is affordable, digital and effective for Canadian entrepreneurs. Check out the Getintheloop App in your favourite App Store.

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