COVID Pulse Check: How Ontario Retailers are Holding Up in 2021

We’re over a month into 2021 and it’s already been a rough year for many Ontario retailers. Read the latest news on what’s been rolling out in the retail space in response to COVID, and how merchants can better prepare themselves for further disruptions ahead.

The Retail Recap: Closures and Restrictions Spark Debate

To recap, on December 26th of last year, Ontario began a 28-day lockdown under the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020. In mid-January, it was extended an additional 30 days, to February 9, 2021.

‘Non-essential stores’ were limited to opening no earlier than 7:00am and closing no later than 8:00pm, including hardware stores, alcohol retailers, and businesses offering curbside pickup or delivery. Restrictions did not apply to stores that primarily sell food, as well as pharmacies, gas stations, convenience stores, and restaurants for takeout and delivery.

The business community immediately expressed outrage and the Canadian Federation of Independent Business (CFIB)’s president Dan Kelly worried that the new policies limiting operating hours risk further crowding at essential retailers like Walmart, Costco or Amazon warehouses.

“We think that allowing small firms to serve one to three customers at a time would actually take the pressure off of the big box stores,” he told Toronto’s CityNews.

Kelly also criticized the Ontario government’s confusing restrictions around what’s considered essential and non-essential businesses. “I don’t understand why a small bookstore can’t hand the book – outdoors – to a customer after eight. But you can line up at Costco and buy it,” he said.

The CFIB, which represents 42,000 Ontario businesses, called for restrictions to business operations, not closures.

Meanwhile, the Retail Council of Canada (RCC) continued to share academic research with the Ontario government to demonstrate that businesses can reopen safely. They pointed to Stanford University research that “demonstrates that a reduction in occupancy to 20% has substantially lower economic costs and is more effective at slowing the spread of COVID-19 due to fewer high-density shopping periods,” an approach that RCC advocated for back in November 2020 when lockdown decisions were being made in the province.

Business Closures Inevitable

In a January 2021 survey, the CFIB found that one in six (or about 181,000) Canadian small business owners are now seriously considering shutting down for good. The CFIB reports that more than 58,000 businesses became inactive in 2020. Their new forecast predicts that more than 2.4 million people could be out of a job this year.

"The beginning of 2021 feels more like the fifth quarter of 2020 than a new year," CFIB Executive Vice President Laura Jones said in a statement, calling on governments to “replace subsidies with sales” by introducing new pathways to reopen businesses.

Financial Resources for Businesses

The federal and provincial governments have been rolling out COVID-19 relief programs since the start of the pandemic in the Spring of 2020. From a rent subsidy program (CERS) to a wage subsidy (CEWS) to the Canada Emergency Business Account (CEBA) to the Ontario Small Business Support Grant, they all have their limitations.

The latest, announced in late January, is a loan program that offers up to $1 million in funding for eligible companies that have lost half their revenue due to COVID-19. Under the Highly Affected Sectors Credit Availability Program (HASCAP), businesses can qualify for between $25,000 and $1 million if they meet eligibility requirements, including demonstrating that their revenues fell by at least 50% for at least three months out of the previous eight.

The interest rate is set at 4% and businesses will have up to 10 years to pay back the loan. In a statement, Minister of Small Business Mary Ng said the program targets everyone from small self-made businesses to larger shops. “Whether it is your favourite neighbourhood restaurant, that bed and breakfast, a local movie theatre, or even a franchise restaurant or hotel, businesses that have been hardest hit by COVID-19 will now have the support that they need to keep moving forward."

How Retailers Can Adapt in 2021

PayBright’s own 2021 Canadian Consumer Trends Guide provides insightful data and recommendations that can help retailers “better understand how to align with customer values and needs, prioritize delivery fulfillment, expand product categories, and better meet the needs of Canadian consumers deeply affected by a pandemic-focused world.”

The survey of more than 2,500 Canadians from coast to coast uncovered the “5 Ps” of consumer behaviour in 2021 and what they mean for retailers:

• Products: Canadians will seek rich online product descriptions and deals to make buying decisions. They expect to spend less on travel and experiences and more on clothing and basics. And as consumers make more environmentally friendly purchases, there will likely be growth in reCommerce and rental markets.
• Payments: With increased consumer demand for flexible payment options across age groups, 2021 will see the continued acceleration of buy now, pay later options in the retail industry in Canada, with an emphasis on the e-commerce channel. Look for more of this in categories like electronics, furniture, mattresses, beauty products, and sporting goods.
• Planning: Regardless of the consistent changes COVID may bring, Canadians overwhelmingly indicated that their spending will be powered by incentives like deals and sales. For many consumers, 2021 is expected to be the year of ‘spend the same or less’. Retailers will be expected to offer competitive pricing in all categories.
• Place: Even as online experiences rise in popularity, physical stores will need to continue to adapt elements of the online experience to meet the needs of consumers seeking hybrid online/in-store experiences post-lockdown, i.e. services like curbside pick-up may continue to be a thing. Native shopping on social platforms will also continue to grow as a trusted sales source for retailers.
• Psychology: Ethical and values-based brands will continue to rise in popularity and attract consumers mindful of a brand’s stances, sustainable practices, and labour practices. Purchasing directly from manufacturers will also grow as more consumers prefer to skip interactions with third party giants and value local non-chain businesses.

Dissatisfied? Retailers Can Clap Back

If you’re a business in Ontario and you want your voice heard, the RCC encourages you to send your MPP a letter. You can also sign a CFIB petition calling on Ontario Premier Doug Ford to adopt its Small Business First strategy, which would allow all non-essential businesses to open to in-store operations but with limited capacity for customers and public-facing staff.

Retailers can expect another unpredictable year ahead, but by understanding consumer behaviour and catering to new buying habits, they can provide the sales and service Canadians expect in a post-COVID world.

This article is provided for informational purposes only. It is not an exhaustive review of this topic. The content is not financial or investment advice. No professional relationship of any kind is formed between you and PayBright. While we have obtained or compiled this information from sources we believe to be reliable, we cannot and do not guarantee its accuracy. We recommend that you consult your personal finance professional before taking any action related to this information. PayBright is a provider of Buy Now, Pay Later (BNPL) solutions. BNPL providers offer plans with a variety of terms and conditions, including interest rates, fees, and penalties, and have different standards for qualifying for loans. Laws and regulations governing BNPL providers vary by jurisdiction. We recommend that you compare and contrast plans, read the fine print, and conduct detailed research into any BNPL provider before using their services.