Retail sector forgotten: shop owners

Alex and Margaret Pearson were in dire straits with their Lunenburg business two months behind on rent and the couple’s landlord refusing to give them a discount, but a Halifax microbrewery came to their rescue.

Their pals at Tidehouse Brewing launched a successful fundraiser last week to cover the couple’s $1,500 debt on their vintage clothing shop Ametora Supply, that’s been closed since the COVID-19 lockdown started in midmarch.

The Pearsons are grateful for the support but are frustrated over having to rely on the charity of friends and strangers to pay the rent. Their landlord, based in Toronto, isn’t prepared to negotiate their rent and has told them she won’t be signing on to a new federal government program, Canada Emergency Commercial Rent Assistance (CECRA), that would reduce their rent by 75 per cent for April, May and June.

The couple is hoping to be back in business on June 1 when the province is expected to lift some public health restrictions allowing for businesses to reopen. But that still leaves them with the urgent challenge of coming up with June’s rent without business revenue.

The couple is getting by with the Canada Emergency Response Benefit (CERB) that provides them $2,000 a month each. But they don’t qualify for any other government assistance programs for small businesses.

They’re in need of rent relief and want the province to make it mandatory for commercial landlords to participate in the CECRA program. They believe the program unfairly puts businesses at the mercy of landlords who have the option of participating in the program.

Under the program — which was announced last

month and is expected to be up and running sometime this week or next — the government would pay commercial property owners half of the rent for April, May and June. That's provided they have an agreement with the tenant to reduce the rent by at least 75 per cent for those months. So the tenant would be on the hook for 25 per cent of the rent while the landlord would swallow the remaining 25 per cent. The program is partially funded by the province.

The couple is now sitting on thousands of dollars of unsold winter and spring merchandise. They can't afford to miss the late spring and summer seasons when they typically bring in 70 per cent of their revenue. They say rent relief would help get them through what is certain to be a challenging summer.

“The government has not acknowledged retail at all,” said Alex. "They're tacking us on the footnotes of financial assistance programs. Retail is always on the list of businesses that doesn't qualify for help.”

"The problem is if we don't have a tourism season and we have to keep opening and shutting we could be in a situation where we don't have an income all summer."

Melvin Cross, a Dalhousie University adjunct economics professor, believes that governments ought to seriously consider requiring landlords to sign on to the program. He said the agreement seems to provide landlords with a fair financial incentive for a reasonable, limited period of time.

“If landlords press a tenant for full rent and there's no revenue stream they need to be thinking about who else would take that space if they evict the tenant and will the new renter have an income stream that would support the rent?” said Cross.

He said the feds and provincial government need to incentivize landlords to participate, including the possibility of making it mandatory, given the serious financial crunch facing many small businesses and the uncertaint future they face.

"We'll be looking to them to employ people as the economy kind of turns back to something that we think will resemble normal. That will take time and nobody knows how much time."

The Nova Scotia government allowed clothing shops, such as Ametora Supply, along with a number of other retail and not for profit businesses to remain open during the pandemic. But like many retail businesses the couple chose to close to do their part to contain the spread of the virus but also because staying open didn't make sense with people at home under lockdown.

Because their business is among the retail sector permitted to remain open it doesn't qualify for the provincial rent deferral program announced in late March. The program that is optional for landlords is available to almost only non-essential businesses forced to shut by the province. The government guarantees up to $50,000 per landlord if they agree to defer tenants' rents for the months of April, May and June. Unlike Ametora Supply, qualifying businesses are protected from eviction for non-payment during those months. Comparatively, in New Brunswick, there's an acrossthe-board moratorium on all commercial evictions during the province's lockdown.

After the province announced the rent deferral program the couple reached out to their MLA Suzanne Lohnes-croft and MP Bernadette Jordan looking for financial assistance options. They didn't get much help, they say. Their MLA'S assistant sent them links that provided details on government assistance programs that they had already reviewed. They said Jordan didn't respond to any of their inquiries for help.

"The province is creating a lot of programs that are definitely helping some people, and we're glad for it. But as sole proprietors and retail business owners, we're being forgotten, or ignored," said Margaret, who also sent a letter to the premier but didn't get a response. "Because we were not mandated to close, the provincial government doesn't feel the need to support small retail businesses, but not all retail businesses are able to operate and also maintain a safe environment for our customers."

Neither the province nor federal government said they're considering making the CECRA program mandatory for landlords or that they would make other rent relief options for retail businesses unable to benefit from the program.

Shannon Kerr, a provincial government spokeswoman, said in an email that the province is working to address gaps in federal programs and helping develop solutions and programs to help small businesses.

“Retail business owners should review the provincial and federal programs announced to date to see if they qualify,” she said.

Katherine Fierlbeck, a Dalhousie University political science professor, said the Pearsons are deserving of some rent relief. She said it's also misleading for the

premier to on the one hand demand people stay home but on the other hand allow a host of retail stores to remain open. By comparison in New Brunswick, all retail outlets except grocery stores, pharmacies, NB Liquor, Cannabis NB, hardware stores and vehicle garages were ordered to close.

"At the height of the pandemic, people didn't want to go into stores quite understandably so it didn't make sense for many business owners to pay staff to wait for customers that didn't come," said Fierlbeck.

"If the government really wants people to stay at home they should pay for it and if these businesses are free to stay open then our government shouldn't whine to people who go out shopping."

Jane Deeks, a spokeswoman for MP Bernadette Jordan, said in an email that the federal government has worked closely with businesses to ensure CECRA is "as effective as possible." She said the federal government strongly encourages landlords to participate in the program that will give them stability that many are looking for in this time of crisis.

"Our government has always said that our response to this pandemic will be ongoing, and we will continue to address challenges as they arise," said Deeks.