COVID 2.0 WILL EXACT FRESH ECONOMIC TOLL

`Typical holiday spending will likely be curtailed'

This week would normally mark the traditional start of the holiday shopping season, with Black Friday typically kicking off a frenzied spending spree in which people flock to their favorite stores and sometimes huddle together in lines outside in frigid temperatures, waiting long hours to be first in line to take advantage of store sales.

That was then; this is now. This year will be different as new cases of COVID-19 once again surge across Canada, forcing partial lockdowns occur in many regions of the country.

“It'll be unusual in that I don't think we'll see as many video clips of people crowding into Walmarts, you know, the crazy crowding into stores,” said Nathan Janzen, a senior economist with Royal Bank of Canada.

Janzen said he believes retail spending will "muddle along” amidst various mixed signs, but it's clear that the health of the retail sector is in question, and a second wave of COVID-19 could well exact a serious toll on the economy, in addition to its devastating health effects.

Royce Mendes, an economist at The Canadian Imperial Bank of Commerce, noted that retail sales face an uncertain path over the next few months.

“Typical holiday spending will likely be curtailed, as extended family and friends don't gather together this year to exchange gifts,” Mendes said in a note, noting that the retail outlook is bleak. “Moreover, with further shutdowns now looming to contain the virus, bricks-and-mortar stores will have access to less foot traffic.”

While many businesses have temporarily closed or modified operations, e-commerce is thriving. In September, retail e-commerce sales rose 74.3 per cent year over year, while total retail sales increased 9.3 per cent, according to Statistics Canada.

Canadian businesses reported that their online sales had more than doubled since 2013 to $305 billion last year, or 8 per cent of their total revenues, according to a report by Statistics Canada released on Monday. However, only 23 per cent of small retailers reported sales via e-commerce last year.

Amid this structural shift, small retailers and restaurants, especially those that do not have a strong internet presence, will bear the brunt of the lockdown measures being rolled out in many parts of the country.

“We've already heard from hundreds of concerned small retailers who feel the lockdown restrictions have created a massive unfair advantage for many big, multinational corporations,” said Dan Kelly, president of the Canadian Federation of Independent Businesses, in a statement.

He accused Ontario's provincial government of placing overly restrictive measures on small businesses that won't actually stop people from gathering in large groups.