Tue, 29 Nov 2022

Main Street businesses that survived COVID-19 restrictions are now navigating a pandemic recovery where predicted changes in the retail industry have been accelerated by five to 10 years.

The ability to adapt to these changes, coupled with policies, programs and consumer behaviour supporting small business, are crucial to ensuring our Main Streets thrive. Main Streets are central areas in towns or neighbourhoods where small, independent shops offer goods and services.

As a social innovation designer, I study complex challenges with the aim of finding common approaches needed to solve them. My goal is to discover the principles that can help us design a more humane future.

This future includes vibrant communities that support small businesses. To better understand how to get there, I spoke to entrepreneurs and stakeholders championing Main Street areas in Toronto and across Canada.

The backbone of the economy

In Canada, small businesses employ 9.7 million people or roughly two-thirds of the total labour force, contributing 37.5 per cent of the GDP.

Many small businesses pay their employees liveable wages, offer paid sick leave and engage in fair scheduling practices. They help to beautify streets, support community initiatives and create events that enrich lives.

But small businesses are also struggling to stay afloat. According to the Canadian Federation of Independent Business, 56 per cent of businesses across Canada are reporting below normal sales compared to pre-pandemic numbers. The majority are also still carrying debt from the pandemic and are navigating supply chain issues, labour shortages, rising inflation and a looming recession.

Small businesses facing challenges

While sales are still below normal, business costs continue to climb. A report from the Better Way Alliance, a Canadian business network advocating for ethical business practices, found that rent for many Ontario businesses is commonly increasing between 10 and 50 per cent.

Commercial insurance costs are also a top concern for business owners. The third quarter of 2022 saw a six per cent increase in global commercial insurance prices - the 20th consecutive quarter of hikes.

Canada's high cost of telecom is another challenge. A 2021 study shows that the price tag of mobile wireless and internet is higher in Canada than European countries and the U.S. across most service categories.

While big businesses are better positioned to negotiate rising expenses, small businesses are left feeling the brunt of rising costs - all while navigating pandemic uncertainty and shifts in the market.

Main Street businesses are also facing demands for online and curb-side sales options. The hybridization of in-person and online sales - referred to as "bricks and clicks" or "phygital" - are being forecast as the new normal for retailers.

Transitioning to a mix of online and physical sales involves more than just launching a website. It requires a shift in how a business operates, including technology upgrades and changes to its human resources and physical footprint, which necessitate significant time and financial investment - things that small businesses often run short on.

How to walk the talk

According to a recent survey, supporting small businesses is important to 86 per cent of Canadians. At the same time, 67 per cent of Canadians are shopping less in stores, compared to before the pandemic. Some have cut back on spending entirely, but most have shifted online.

With Amazon as the most popular e-commerce platform in Canada - earning over US$9.8 billion (followed by Walmart, Costco and Apple) - there is a concerning disconnect between support for small business and where Canadians are spending their money. This gap could mean the difference between having independent shops or vacant storefronts.

I encourage Canadians to visit neighbourhood businesses, post positive reviews, buy gift cards and resist purchasing from large online retailers when buying local is an option. Increasingly, local retailers can offer quick delivery on par with the big guys. When you can, buy directly to help small businesses save on fees charged by e-commerce and delivery platforms.

Here are five additional ways Canadians can help small businesses remain an important part of our communities:

  • Support the Better Way Alliance as it calls on the Ontario government to reform commercial rent in the province. It recently launched a petition to reform commercial rent and lease agreements.

  • Champion the Canadian Federation of Independent Business's efforts to encourage the insurance industry to make affordable commercial insurance accessible to small businesses by discussing the issue with your local MPP.

  • Learn more about the efforts of organizations campaigning for more competition, choice and affordability for wireless and internet services in Canada.

  • Spread the word about initiatives like Digital Main Street that are helping small businesses transition online. It offers one-on-one support and access to services and funding to help Main Street businesses innovate digitally.

  • Support your local business association's efforts to create community spaces and events, and volunteer for activities that spotlight independent retailers.

  • Looking to the future

    These solutions all come down to one thing: valuing connection over just transaction. A common thread in the research is a clear desire for people to connect with and support small, neighbourhood businesses.

    Judy Morgan, a retail consultant I interviewed, emphasized the importance of creating valuable spaces that people will want to visit, in a process known as placemaking: "There needs to be the physical infrastructure to facilitate coming to the area and then enjoying it while you're there, as opposed to just being purely transactional."

    As Aaron Binder, business owner and director of the Better Way Alliance, said: "There's a difference between consumers and customers. Customers are people. Consumers are a group. We want to focus on people... People are looking for that personal interaction."

    Our Main Streets offer more than just goods and services. They are integral to the fabric of a healthy community. A future where small businesses thrive must include more support through how we spend and through policies and programs aimed to keep expenses fair and our streetscapes business- and people-friendly. This is key to ensuring our communities are designed for making connections, not just transactions.

    Author: Sarah Tranum - Associate Professor, Social Innovation Design, Faculty of Design, OCAD University The Conversation

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