Why the Shop Local Trend Could Save Small Businesses and Fuel an Economic Recovery
According to research by the Canadian Federation of Independent Business (CFIB), 44 per cent of small businesses are reporting that their sales numbers have been slashed in half due to the lockdown. Photo: Photo: Luis Alvarez/Getty Images
The hundreds of thousands of small businesses that line the main streets of cities across Canada are in deep trouble due to the COVID-19 economic fallout and they need our help.
While few sectors have escaped the punishing effects of the lockdown that’s just now ending, independently owned businesses have been hit particularly hard. With most Canadians hunkering down in isolation over the last four months, local hardware shops, cafes, bars, restaurants and bookstores have seen their sales almost completely dry up.
This development is obviously very bad news, not only for the store owners but for the Canadian economy as well. Our chances of making a full recovery depend largely on the success of the small business sector, the so-called “backbone” of our economy.
These small stores, close to half of which are run by Canadians 50 and over, power the economy in a way few of us realize. Before the pandemic hit, they employed over eight million workers, (close to 70 per cent of the private workforce) and accounted for nearly 40 per cent of Canada’s GDP.
“In many ways, small businesses are the Canadian economy,” says Dawn Desjardins, Vice-President and Deputy Chief Economist, RBC. “The scars of an unprecedented recession are already visible on every main street in Canada.”
Main Street in trouble
But with sales numbers slashed precipitously over the four months of economic lockdown and business lagging even as the economies reopen, close to half of businesses have been forced to lay off workers. The future of many others is in doubt as social distancing policies and fear of going out further reduce the flow of customers.
All told, the impact on main street has been catastrophic. According to research by the Canadian Federation of Independent Business (CFIB), 44 per cent of small businesses are reporting that their sales numbers have been slashed in half due to the lockdown. And when the CFIB asked small business owners to list their big worries about COVID-19, the results were unsettling, if not entirely unpredictable.
- 69% were worried about economic repercussions on the local and global economy.
- 66% were worried about consumer spending being reduced.
- 58% were worried about paying rent, meeting payroll, paying suppliers.
While federal government programs like Canadian Emergency Wage Subsidy (CEWS), the Canada Emergency Business Account (CEBA) and the Canada Emergency Commercial Rent Assistance (CECRA) have helped small owners with emergency funds to meet their payrolls, they’re only short-term solutions and will not be enough to get owners through the crucial months ahead.
Canadians appear to be waking up to the dire situation facing many small business owners. The CFIB has launched the Small Business Everyday Challenge, a social media campaign to encourage people to shop locally in their communities, and encourage family members to do likewise.
Shopping locally pays
American Express Canada has jumped on the trend, launching a national campaign that will reward its card members for shopping locally. The Shop Small campaign, which runs until Sept. 13, is the company’s largest ever card-member offer and aims to help businesses recover from the pandemic’s economic fallout.
Users who enrol in the Shop Small program can earn up to $50 by supporting independently owned businesses in their communities. For every $10 purchase (after taxes) at a qualifying small business, they will be eligible to earn a $5 credit on their statement.
Before launching the campaign, American Express conducted research on how the pandemic has hit small businesses in Canada. According to its Small Business Recovery Research, 73 per cent of business owners are “deeply concerned” about their future, 49 per cent say that “every day is fight to keep their business alive” and more than half (53 per cent) are nervous about making through to 2021.
However, on a positive note, the research also turned up an encouraging statistic. It found that 83 per cent of consumers agree that it’s time to rally around small businesses. This shows the public is keenly aware of how important the recovery of small businesses is not only to our economy but to the life and vibrancy of our local communities. And it reveals an urgency and willingness on the part of Canadians to participate in the recovery.
“Through our research, we learn that more than half of small business owners need to see a sharp recovery for their business in order to remain viable,” says Kerri-Ann Santaguida, vice president and general manager of merchant services for American Express Canada, discussing the company’s Shop Small initiative. “But they cannot do it alone. They need us all to show up in this critical time.”
Ultimately, Santaguida says the initiative is much larger than just another credit card rewards program.
“We really believe this national campaign will encourage all Canadians to get out and support small business – no matter how they choose to pay,” she says. “Just get out and support the local communities.”