Consumer ‘COVID-19 hangover’ means a slow return to normal for businesses
The country is slowly emerging from the closure of one region after another, but Canadians are in no hurry to go out and spend money as they would in days before the pandemic. Businesses can expect a gradual return to normal as consumer anxiety slowly subsides.
Surveys show that 52 percent of Canadians in the Deloitte State of the Consumer Tracker report feel safe when they return to stores. Marty Weintraub, national retail leader at Deloitte Canada, said this number was about 32 percent the previous month.
“With certain parts of the country opening up in different cities and business opening again, you will see a steady 52 percent increase over the next few weeks, but it will be a bit difficult to slow the ascent. "
For industries that rely on personal engagement (such as hair styling and physiotherapy), this rise could take even longer. 45 percent of those surveyed feel comfortable when they interact personally with others.
The rate at which Canadians are returning to stores is part of the equation, but Weintraub said that the economic damage that many households suffered during the pandemic means that consumers will shy away from major, non-essential purchases.
“There are still 43 percent of Canadians who really delay large purchases. So this is all a kind of economic hangover. It's not as bad as six weeks ago, but there is still this cloud and these numbers will be stubbornly high for some time. "
Deloitte Canada's report describes the expected lengthy consumer behavior after the pandemic as "COVID-19 hangover", where consumers can travel slowly again and discretionary spending could change significantly. Online shopping, self-checkout and essentials will lead to growing trends after the pandemic, the report said.
These trends are not new and were challenging retail even before COVID-19 was launched this year, Weintraub said. The global pandemic has become a mass accelerator that has prompted retailers to adopt a stronger online presence and adapt to these new behaviors.
"What COVID really did was like taking the consumer, putting him in a time machine and going into the future," said Weintraub. "It's a small restart for physical retail."
While the weather is falling on the terrace, many restaurants are either trying to reopen or operators are marginalized because the potential profit would be too low to justify the fixed cost of opening, said Sylvain Charlebois, director of Agri- Food Analytics Laboratory at Dalhousie University.
Restaurant owners customize their facilities to ensure security and meet customer expectations. About 52 percent of these Canadians plan to avoid restaurants for the foreseeable future, according to a survey by the Agri-Food Analytics Lab at Dalhousie University's Faculty of Agriculture.
"The experience is not the same," said Charlebois. "You don't necessarily just go out to eat, you go out for an experience. And so with masks and plexiglass and another menu, obviously many things are compromised. "
Charlebois spent a night north of Montreal when restaurants outside the city reopened on Monday. He said that after tweaking expectations of serving employees with masks and a changed menu, it didn't feel much different than it did before the pandemic.
"You heard laughter, you heard people chatting, music. The street felt alive again, and it's worth a lot, especially after three months in prison. "
Another result of the survey found that Canadians intend to support local independent restaurants. About 64 percent said they would visit a family business after the country reopened.
"There is an acute awareness that support is being provided to operators who may not have the same support network as larger chains," said Charlebois, adding that this support is urgently needed as the economic downturn is likely to lead to a decline in the food sector becomes .
Small businesses will not recover quickly from the pandemic even if the country recovers. Dan Kelly, president and CEO of the Canadian Federation of Independent Businesses, told Yahoo Finance Canada that only 17 percent of the companies surveyed have normal sales. It's a challenge for businesses to open up and bear the full burden of spending while the revenue isn't there.
“Most companies know that when they reopen, they will experience weeks, if not months, where they are under water and where they open their doors. And they lose money every day, ”said Kelly. "I spoke to a restaurant that just opened again for take-away and delivery in Ontario - a Chinese restaurant and a reasonably new company - and she said her weekend sales were $ 10."
Kelly said federal support for these small businesses was not as effective as he had hoped. They are expected to end soon or they are not designed to support companies during the downtime. Kelly primarily referred to the Canadian CECRA (Emergency Commercial Rent Assistance) program, for which only a handful of landlords applied.
"One reason for encouragement is that the federal government has decided to extend the wage subsidy," said Kelly.
Even if the shy Canadians return to normal shopping patterns, the delay effect will be enough to put a lot more companies under pressure, Kelly expects.
"I think we just saw a tiny fraction of the actual effect. There are many essentially dead businesses ... where the funeral has not yet taken place. "
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