Shifting consumer habits during the pandemic may change the future of retail in Canada

When Canada's COVID-19 crisis began, Tariq Al Barwani initially thought his business was going to be OK.

Plentea, a tea bar in Toronto's Parkdale neighbourhood offering specialty drinks like tea lattes as well as retail loose-leaf tea, still had quite a bit of foot traffic.

But that changed when Ontario shut down all non-essential businesses March 23 and Plentea's customers started staying home.

"What happened was the people who were going to work around us, who actually spent money during the day with us, they stopped going to work," said Al Barwani. Overnight, 70 per cent of his customers disappeared.

But some started direct messaging the shop through Instagram and Facebook to ask about getting their loose-leaf tea through curbside pickup or delivery.  

"People weren't coming in because they were still quarantining, but our loose-leaf tea sales spiked."

Al Barwani and his co-founder, Mohammad Binyahya, tried to keep their brick-and-mortar shop going. "We altered our hours and we did our best to make sure to have incentives, contactless pickups, Uber Eats, but it still didn't really do much."

The shop's last day at their physical location is Saturday, after which the company will shift to an e-commerce model selling their retail products online.

Plentea is just one of many businesses to have shuttered their physical locations permanently, or file for bankruptcy protection, during the shutdown. Retail experts say the industry could be changed for good with in-store experiences adapted to prevent virus transmission and consumer habits permanently shifted to favour e-commerce.

For those brick-and-mortar stores that are now planning to reopen, there's a lot to think about, like how to attract customers in this tentative new normal, how to get them back inside stores and put them at ease once they're there, or how to focus more on bringing the stores to their customers. 

Shaky ground for retailers before COVID

Even before the pandemic came along, 2020 was already shaping up to be a tough year for retailers.

"Some are saying that the pandemic couldn't have really come at a worse time," said Craig Patterson, director of applied research at the University of Alberta's school of retailing and founder of Retail Insider, an online retail industry publication.

"We'd seen a decrease in foot traffic on streets and in shopping centres. We had retailers that already were having issues around costs," he told Spark host Nora Young.

Back in January, Patterson tallied a list of 1,000 store locations set to close in the first quarter of 2020 — and that was before anyone knew COVID-19 would force many retailers to shut their doors to comply with public health measures.

Since then business news has been peppered with stories about retailers that have announced that they're going permanently out of business or seeking bankruptcy protection during the crisis — Pier 1 Imports, Aldo and Reitmans, to name a few.

Yet the crisis has also inspired innovation. From local book stores and florists offering curbside pickup arranged over social media, phone or email, to robust new e-commerce sites, retailers are finding ways to interface with their customers while maintaining a safe distance.

While before COVID-19 about 10 per cent of Canadian retail sales were done online, Patterson said he believes e-commerce spending has more than doubled since then.

"I suspect that with the habits that are being formed by consumers who are getting used to shopping online … these habits that are being formed are going to be permanent in some cases."

Changing the in-store experience

Retail strategist Melissa Gonzalez, CEO and founder The Lion'esque Group and principal of MG2, agrees.

"We're definitely in that safety-first phase, where it's all about creating safer environments and curbside pickup, etc., and what's interesting is that it's definitely reshaping consumer behaviours and expectations in the future," said Gonzalez, who is based in New York.

"The next stage is really going to be about how we further integrate technology into store experiences, and then how do we reconfigure layouts for a modified or an evolution of what customer journey looks like in an in-store experience."

Beyond simply installing Plexiglass and hand-sanitizer bottles, for some retailers that could mean installing a self-checkout, or moving to an Apple store model "where you're kind of just checking out wherever you're standing that makes sense to you."

If Darryl Julott, senior manager at Digital Main Street, has his way, many small retailers will help fortify themselves against the effects of this crisis and other challenges by developing e-commerce websites.

The non-profit organization owned by the Toronto Association of Business Improvement Areas wants to help independent businesses and artists build online stores free of charge.

They've partnered with the City of Toronto and several tech companies to launch the "DMS ShopHERE" initiative, a collaboration between Digital Mainstreet, the Schulich School of Business at York University and a network of volunteer developers from across the city. 

"So we actually put a callout at the beginning of the program to the Toronto tech ecosystem essentially asking for volunteer support and the response has been unfathomable. We've got over 800 volunteers right now that have committed to building over 7,000 websites in Toronto and beyond."

On Thursday, Google Canada committed $1 million to help expand the program to 50,000 businesses nationwide.

The timing couldn't be better for small business owners like Tariq Al Barwani, who was one of the first to take advantage of the program just as the COVID crisis disrupted business at Plentea.

"Within a week we went from applying to somebody getting back to us — that was a consultant — and then within a day, we hammered out a website."

Al Barwani said he hopes to expand their new e-commerce offering into a hub for information about unique tea drinks people can make at home with how-to videos and other interactive elements.

"I see a lot of businesses moving to a smaller footprint, especially now with how expensive rent is," he said.

"We may open up a new location in the future but for now we're going to focus on online sales."

Written by Brandie Weikle. Produced by Adam Killick, Michelle Parise and Kent Hoffman.