Having a vaccine in place in a timely fashion will be critically important for the future of many retailers across the country, say industry experts.
That alone may be the key to whether thousands of small business owners survive the COVID-19 pandemic or shut their doors permanently.
As the country’s economy continues to struggle during this crisis, business owners across the country are hoping that a vaccine will boost consumer confidence to go out and spend money in the thousands of establishments that have felt the economic pain this year.
Retailers Hope Vaccine Will Boost Consumer Confidence
Dan Kelly, President and CEO of the Canadian Federation of Independent Business, said it is absolutely critical to get the vaccine widely distributed not just to end the incredible health challenge associated with COVID-19 but also the economic challenge associated with it too.
“There are loads of businesses that have been virtually shut down since March of 2020. You think about businesses in arts and recreation, in cinemas, in bars, many of them have had trickles of income but some have had none,” he said.
“Even with all the precautionary measures and low levels of COVID spread, those businesses have not been able to serve customers, have not been able to draw an income since March of 2020. Many of them are toast now but there are going to be some that will survive but to survive we need to see a vaccine and we need to see it fast.
“Every day that’s delayed more businesses will die, not just people. That’s the cold hard reality.”
Kelly said the lockdown measures are obviously the most public cause of the slowdown of business in a number of different sectors including retail.
“But it’s just not government-imposed restrictions. It is also the restrictions people are putting on themselves,” he said, adding many people have made the choice to stay home rather than venture out into the public.
“For businesses to get back to normal we need COVID to be either a non-issue or a dramatically smaller issue than it’s been. We really need a vaccine. We need this threat taken away otherwise people are going to stay home.”
CFIB Forecasts a Possible 225,000 Small Business Closures Across Canada
Earlier CFIB estimates suggest 160,000 small businesses across Canada may permanently close due to COVID-19, with the potential for the number to rise to 225,000.
Retail specialist Bruce Winder said a vaccine is critical for retailers.
“If you look at which industries are hurt the most during this, one can argue that it would be hospitality, travel, restaurants and retail. So I think it’s very important for retail that the vaccine makes its way through Canada and the sooner the better,” said Winder, author of RETAIL Before, During & After COVID-19, and President of Bruce Winder Retail.
“There’s businesses that are hanging on by a thread. Someone else coined the phrase but they called them zombie businesses where government subsidies are keeping them alive. There’s a lot of those and the longer we wait without getting the vaccine the more we run the risk of some businesses not making it, of government subsidies running out.
“The big thing too is we’ve got the next big spring season coming up. January and February aren’t the biggest times for retail anyway unless you’re in the fitness business or something of that nature. But the next big wave is the spring. It will be curious to see how much of Canada can get vaccinated before the spring and what that means in terms of spring businesses. Or are we going to have to wait to see things get back to normal in the fall? Or is it even going to be in spring 2022 by the time everyone’s vaccinated? It has a big impact on when some things go back to normal so to speak as much as they will go back to normal.
“The longer we stay like this the more some of these habits become entrenched like the growth in online shopping. The longer we stay in this form the greater some of them have the probability of sticking.”
George Minakakis, a global retail executive with over 25 years of experience and CEO of the Inception Retail Group, said recently his company completed a poll asking people how long post vaccine will they go back to normal routines.
“The response was that 47 percent of them will go back to some kind of normal routine six to 12 months after vaccine,” said Minakakis. “I created a timeline. So if we started vaccinating in early 2021 and I’m going by what the government says that by the end of Q3 most of the population should be vaccinated which might be 50 to 70 percent of them, not everybody. Thirty four percent of them won’t come out to market for 12 months and the other 13 percent won’t come out for six months. That’s 2022.
“The timing of the vaccine yes is critical. But how does this parlay in helping businesses? I question just how fast that kind of return or recovery can have because based on my analysis there is no way it’s going to turn around anytime soon.
“Anybody that’s tight on cash, I don’t know how long they can survive on getting let’s call it the stipend that the government’s giving them to carry them through and how much of all their costs does it actually cover. It can’t be putting food on their table, particularly independent businesses. There’s no way that’s putting food on the table of the business owner. It may be covering their costs or their occupancy costs but there’s no way it’s putting food on the table and paying their own income or personal expenses.
“If my analysis is correct and I trust it, I’m in a place that by the middle of next year we should see some significant failures coming our way. Small businesses are just going to go silently in the night.”
Diane J. Brisebois, President and CEO of the Retail Council of Canada, said the impact of COVID’s second wave is devastating in several ways. The first is obviously economic, given the critical period that this season represents to most retailers, especially having taken body-blows through the spring and early-summer and so being less resilient in their financial capacity.
“It is at its worst in locked-down areas but the other areas are also impacted by the psychological effect on consumers of messaging re the pandemic, both on their sense of economic confidence re their ability to make purchases and in their fraying confidence in the public health environment. And this psychological impact isn’t only on customers by any means. Mental health is jeopardized for employers and employees, coping with uncertainty re their personal financial circumstances and the stresses and strains of operating in such a difficult environment,” she said.
How long can these retailers last under the current environment before they close their shops permanently?
“That will vary of course but many retailers are financially depleted by the first wave, so not as robust in dealing with the effects of the second wave. It will also depend in part on the rest of the season, so finding ways to help retailers open under reasonable conditions is vitally important. There are especially deep vulnerabilities for those whose merchandise is largely seasonal, because where they are closed or deeply constrained by public health order, their merchandise will become stale. That is the group that causes the Retail Council of Canada the greatest concern and especially as we consider those retailers with one or a few stores in the lockdown regions of the country. These merchants are most at risk as they cannot rely on sales from other stores or even online sales, as ecommerce still represents, for most smaller brick-and-mortar retailers, a small portion of their sales,” added Brisebois.
Is a vaccine then a saviour for the industry?
“For those retailers who can make it through into spring it could be important, as it will lead to increased public confidence and presumably lead to fewer public policy restrictions. But it will take a while to vaccinate a large share of the population and of course, the earliest recipients will be, as they should, in long-term care homes, healthcare workers and first responders, with widespread vaccination being further down the line. The challenge for many will be to get through the immediate period and the vaccination will post-date most of those battles for survival,” explained Brisebois.
“The Retail Council of Canada forcefully and publicly advocated for capacity restrictions versus full lockdowns across Canada as retailers have proven that they can keep employees and customers safe during the pandemic. Unfortunately, there have and continue to be lockdowns so make no mistake – there will be many retail casualties – with the greater number being at the independent and small regional chain level.”