REINVENTING THE BUSINESS MODEL
While some have found a silver lining in online sales, it will take time to climb out of the hole, as Derrick Penner explains.
Before the COVID-19 pandemic, book seller Hilary Atleo thought the online-sales options in the inventory system she had signed up with for her Iron Dog Books shop was maybe a bit excessive.
It “seemed much bigger” than Iron Dog needed, Atleo explained, when the business started in 2017 as a mobile book shop in a panel van that set up at festivals and special events. She remained wary about going online as they added a bricks-and-mortar storefront on East Hastings to their operating model last December.
Fast forward to March 17, however, and being able to “flip on the online store” became a core part of staying in business as Atleo decided to close the doors to walk-in traffic at Iron Dog and the festivals and events its truck relies on began falling by the wayside.
“What it has meant for us at this moment is that our customers, who are working so hard to physically distance and to follow Dr. Bonnie’s (Henry) recommendations and be responsible, can still interact with us and shop our website,” Atleo said, but not necessarily for couriered deliveries, which are expensive for small businesses.
Instead, customers were more than willing to pick up orders curbside, which Iron Dog continued to offer, or Atleo herself made local deliveries, taking advantage of the emergency exception ICBC made to allow business owners to use their own vehicles.
“The web store is actually about local resiliency, as well,” Atleo said, and serves as an example of how thousands of British Columbia retailers are scrambling to find ways to reinvent themselves.
Retail stores were never ordered closed in B.C., but the Retail Council of Canada estimates half of the province’s “non-essential” merchants shut their doors as businesses issued work-from-home policies and residents were encouraged to self-isolate.
There have already been some major business failures in the pandemic’s wake, the most prominent local example being the venerable, Vancouver-headquartered Army & Navy, which announced its permanent closure May 10.
Owner Jacqui Cohen said in a statement that the pandemic’s challenges “have proven insurmountable.”
Retail sales in the province collapsed starting around March 10, said Greg Wilson, director of government relations for the Retail Council’s Pacific office. By April, the drop had knocked about one quarter off the receipts of Metro Vancouver stores in almost every category, according to Statistics Canada’s latest retail report.
The agency reported Metro Vancouver’s April retail sales were almost $2.5 billion in April compared with $3.3 billion in the same month a year ago.
The pandemic, however, spurred a huge increase in online sales as, much like Iron Dog Books, retailers turned to eCommerce platforms as part of their survival strategies.
Stores have gradually been reopening since about midMay, restoring an estimated 20,000 of the 70,000 jobs the sector lost at the depth of the pandemic, Wilson said. May is expected to be more of a “mixed” month.
“So, retail sales are climbing out of that hole, but they’ve not recovered by any means,” Wilson said.
Unlike other provinces, “B.C. is actually fairly unique because a lot of stuff could remain open.”
Those stores that remained open helped create the safety measures being implemented by public health and WorkSafeBC in Phase 2 of the province’s business restart plan.
For instance, Wilson said, grocery retailers took the initiative to install Plexiglas barriers between cashiers and customers. Merchants began using stickers on floors and walls to mark out safe distances and control traffic flow.
Now, all businesses are required to have COVID-19 safety plans that take infection risks into account and build in measures such as physical distancing and frequent cleaning of high-touch surfaces.
For stores that remained open during the pandemic, the challenges have come in waves, said Clint Mahlman, president and chief operating officer at London Drugs.
The first was panic buying between the end of February and mid-March, as customers hoarded essentials such as hand sanitizer and toilet paper. Then there was a 30-per-cent drop in traffic as households followed advisories to stay at home.
The evolving list of COVID protection measures — from securing personal protective equipment for staff to hiring additional security to maintain lineups outside stores and limit in-store numbers — have added about 10 per cent to operating costs at the same time sales have declined, Mahlman said.
“From a financial perspective, it has been a really, really rough go on our bottom line.”
Mahlman said the biggest challenge for staff is being put in the position of being “a police officer enforcing customer behaviour.”
Retail remains in a precarious position, according to industry consultant David Ian Gray with the firm DIG360. Retailers are doing innovative things, but a lot of his clients are hesitating to order stock for later in the year.
“They’re not making money, they’re operating at a higher cost per day than they would have in the past,” Gray said, and who survives will depend on which ones have the wherewithal to hold out.
“We need to give confidence to the sector to invest and take the risk and hold on while we sort everything out, (or) we’re going to lose the best of the people that should be helping us through this.”
From a financial perspective, it has been a really, really rough go on our bottom line.” Clint Mahlman, president and COO, London Drugs