The Canadian Federation of Independent Business has lashed out at the Ontario provincial government for once again failing to level the playing field between small business and big box stores such as Costco and Walmart.
On Tuesday, Ontario declared a second Provincial Emergency to address the COVID-19 crisis by issuing a Stay-at-Home Order and Introducing enhanced enforcement measures to reduce mobility.
Non-Essential Stores to Open Only Between 7 a.m. – 8 p.m.
Among other measures it declared that all non-essential retail stores, including hardware stores, alcohol retailers, and those offering curbside pickup or delivery, must open no earlier than 7 a.m. and close no later than 8 p.m. The restricted hours of operation do not apply to stores that primarily sell food, pharmacies, gas stations, convenience stores, and restaurants for takeout or delivery.
Julie Kwiecinski, Director of Provincial Affairs, Ontario, for the CFIB, said the organization received clarification that big box stores that sell a full range of groceries are exempt and allowed to keep their current hours.
“Nothing is really changing for Walmart or Costco,” she said. “We’ve actually been working really hard on this issue to try and get government to see that they need to level the playing field between big box and small business,” she said. “They had that opportunity and they didn’t do it.
“Let’s say I want to buy a book. Right now I have to buy that book by 8 p.m. if I want to buy it from a small retailer but I can’t go in the store. I could do it by curbside pickup. So I’m not allowed to go into that small business store. I can buy that book by curbside or pickup but I can only do it before 8. Yet if I want to buy that same book at Walmart I can waltz into the crowded Walmart store at 9, 10, 10:30 at night and buy the book. It is just not fair to small businesses and again the government had an opportunity to level the playing field. We’ve been working on this file for a couple of months because the holiday season that retailers rely on to make or break is now over.
“They had to make the sales in October, November, or December. And even now today you would think that the government would take the opportunity to level the playing field after all of the concerns that have been raised by small business and they chose not to. We are extremely disappointed in the Ontario government.”
To make matters worse, she said, the CFIB understands there are different rules for Amazon on retail delivery than smaller outlets. She said the organization was told that if a business wants to do a retail delivery after 8 p.m. it is okay for a restaurant but if there is delivery through a third party they must cease operations at 8 p.m. If the business does its own delivery like Amazon, they are allowed to deliver after 8 p.m.
“So once again the big guy Amazon wins. So I would say the score for today would be Goliath two David zero,” said Kwiecinski.
Dan Kelly, President of the CFIB, said no other province has locked down small retailers while handing huge competitive advantages to big-box stores.
“Incredibly, the Ontario government made the deep unfairness in lockdown rules even worse by implementing a new curbside pick-up and delivery curfew of 8 p.m. for small businesses, while exempting big box stores like Walmart,” he said.
“Walmart, Costco, and Amazon can continue to sell non-essential goods in-store or deliver them to Ontarians with no additional changes, but small retailers will not be allowed to hand a product to a customer outdoors or even deliver one after 8 p.m. How this will help stop the spread of COVID-19 is anyone’s guess.
“CFIB is also very worried that ineffective lockdown rules will now be applied to additional business sectors, like construction. We need to find a pathway to allow small businesses to safely reopen.”
Bruce Winder, author of RETAIL Before, During & After COVID-19 and President of Bruce Winder Retail said retailers that are not in the grocery, gasoline or pharmacy categories are most vulnerable now.
“Within the vulnerable, those that do not have e-commerce or sell products or services that are not conducive to e-commerce will suffer the most,” added Winder.
He said smaller retailers need to get online and offer delivery and/or curbside pickup, offer new innovative products or services that cater to consumer lifestyles during the pandemic, take full advantage of government subsidies, negotiate with landlords, lenders, and suppliers to defer payment or pay less to preserve cashflow, defer capital expenses or any other expense to preserve cash.
Winder said the future will see less stores, more warehouses/parcel pickup spots, cheaper store rents, more frugal consumers (except high end segments which are thriving), less competitors but those who remain become bigger, more work from home lifestyle goods, stickiness of e-commerce, lower mall traffic, the need to continue to offer safe/clean store operation protocols, higher insurance rates, and higher supplier costs.
Nothing is Changing for Big Box Retailers like Walmart, Costco, & Amazon
Gary Newbury, retail supply chain and last mile interim executive, said the future of essential businesses, particularly big box retailers, seems guaranteed as the government has allowed stores and supporting supply chain to remain open, subject to safety protocols and extra vigilance on lineups outside stores.
“These networks have the scale of operations to prosper during this period and to drive excellence into online services such as home delivery, curbside and pickup in store. Although, on the inside, the staff must feel in a continued frazzled state, often covering for colleagues who are required to self-isolate, these businesses will continue to see record sales, record profits and cashflow, and no obstacles in their way from adjacent competitors, and continue on their transformational journeys to winning in the 2020s,” he said.
“The converse is true for those designated ‘non-essential’, within retail. As well as apparel retailers, the classic ‘mom and pop’ stores, and service businesses, often single store businesses will have been very unprepared for the first lockdown, invested in the safety protocols and then been forced to shut down on Christmas Eve, missing Boxing day/week sales and January clearance they would have been banking on to restore their cashflow and turn their inventory. They have a double whammy of a loss of big sales, and now being saddled with unsold inventory for potentially months. For many, they face a grim choice; to sink more of their personal capital into the enterprise to support home delivery, or simply lock up and hand over the keys to the bank/landlord.
“The most unfortunate situation is this; for many years some of these businesses were able to create strategies to compete with their larger competitors by specializing their proposition to the local community and offering personalized, friendly service. Now they face an incredible challenge as their former customers find equivalent products at mass merchandisers such as Costco and Walmart. Many will, justifiably, feel they have been let down by their government for not insisting essential retailers can only sell grocery and pharmacy supplies.
“For those businesses that quickly adapted themselves for e-commerce, maybe leveraging Shopify to accelerate their digital transformation, creating and implementing a clear differentiation strategy, and aggressively marketing themselves in the local community, they stand a good chance, through these digital investments, to continue to trade.
“In fact, they may have equipped themselves very well for when the economy reopens and economic growth can be contemplated.
“The tough decision is whether to labour on with the costly home delivery service and keep the majority of their staff employed or come to an arrangement with their landlord and close shop until the latest lockdown is lifted. Some do not have the cashflow reserves to do the latter and so they are forced into trading, even if this means cutting into profits, or worse CCAA (creditor protection),” he said.
“Overall, this latest development across Ontario will have a devastating impact not only on smaller retailers, their suppliers, and the wider ecosystem that supported them. It is hard to avoid suggesting the 10 months, and what is in front of us for small and mid-sized business, is nothing short of an apocalypse. Some of this effect may have already been in motion during 2018/19. Government intervention has certainly put the pedal to the floor on their unfortunate demise.”
Veteran retail expert George Minakakis, a global retail executive with over 25 years of experience, said lockdowns are not applied evenly or fairly.
“And I don’t understand how one thinks that reducing hours of operations at the retail level is going to help. That idea simply forces more consumers to go out during the shorter hours creating more crowds and traffic,” said the CEO of the Inception Retail Group. “Second, we should divide businesses into two categories: Demand in the form of needs versus wants. Those that will benefit later from pent-up demand. Hair salons, barber shops, dental, optometry will lose appointments initially, however most patrons and patients will return to fill those needs when they can.
“Those whose revenue relies on filling immediate wants such as retail, restaurants, bars, movie theatres, conferences, and hotels. You don’t get back lost demand in these environments, it is usually lost. Both need the revenue to pay their expenses but the group that serves essential needs will bounce back faster, if they are good operators. Non-essential businesses that fill wants will have a tougher time rebounding and are the most vulnerable.”
Minakakis said there are two crises underway, a health crisis and within that a business crisis. Lockdowns unfortunately cannot be avoided given the current scenario.
“At the end of the day those with the deepest pockets or strongest balance sheets have the means to ride this through, provided they are also leveraging government support programs,” he said. “Today, as in 2020, I would be working under the premise that this isn’t going to end anytime soon. The number one question all businesses should be asking is how long they can hold on? If you can be in the game for a year under these circumstances, you are in a good position.
“With that said, then I would be employing a lot of grassroots (old school) marketing initiatives: Whatever your digital assets are, work them 24/7; Be visible and be engaging; If you have a customer database use it; Survival is about guerrilla marketing warfare, this will be like working in the 1960’s with e-commerce; Collaborate with other businesses where you can and create an environment where all can benefit from a pseudo co-op; Conduct all levels of marketing even if email or flyers is all you can do. Do it; Be prepared to personally deliver to customers if your business calls for it; With delivery or curbside, if you can afford to, throw in a surprise with the order. Customers will appreciate it and will remember it. But be consistent about it; Above all demonstrate proper care hygiene, wear masks, social distance, and no heroics like secretly cutting hair at someone’s home; and Conduct scenario planning. We are in a fluid situation and be prepared to change direction.
Minakakis said he hopes that everyone has learned retail street fighting skills through this pandemic. 2021 is the year to focus on improving an organization’s culture, on building agility and resilience.
“Further develop your digital assets. The vaccines may be coming, but don’t count on anything being normal this year or next,” he said. “Create a hybrid model for your business. That means be better at both physical and virtual retail simultaneously. The days of mono business models are over. In Asia independent and mid-sized retailers remained sound during their outbreak because they could easily shift to e-commerce.
“2022 will be a year filled with a lot of competitive fighting to make up lost ground, be prepared, it will be ruthless to gain back share. The future after 2022 will be powerful and exciting. It will be the roaring Twenties but keep in mind that things will be moving faster, everyone will be pursuing technology. I expect stores to be investing in virtual experiences as should malls and department stores. Once consumers emerge from this pandemic, if retailers want to draw them back it will be all about an experience of entertainment value, and not the ones with just subtle niceties. This means it must be technology driven and engaging.
“The other aspect of the future we have been observing during the pandemic is consumers will be looking for and want more leisure time. The shift to work from home is not going away. That means delivering “convenience” should be looked at as a service to improve on continuously, and you need to own every detail outside your store or distribution centre.
If you are an independent, join up with a similar business and hire an advisor. Mid-sized businesses should have an advisory board (but filled with experts with diverse backgrounds). This will help you prepare for many unintended scenarios and a fast-moving future. Finally, this pandemic has taught us that life is precious, don’t waste it just browsing…live it! Consumers will be back!!”