July/August 2020 – Facing the Music

With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.

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Page 39 of 79

40 BCBUSINESS JULY/AUGUST 2020 ARITZIA teric selection of unique, design-focused housewares, books and clothing. Sales had mysteriously slowed somewhat over the past two years, Boquist noted mourn- fully last fall, with a few customers oblivi- ously chatting to her about their Amazon purchases as they came in to pick up a birthday card. But she still had a solid core of regulars. And in some cases, Boquist said, smaller stores could deal with reces- sions better than the big ones. "We can be more agile." For Boquist and other retailers, no one knows what will emerge from the pan- demic rubble. Statistics Canada reported a previously unheard-of 10-percent drop in national retail sales for March, when most non-essential stores had only been open for about two weeks, and a plunge of more than 24 percent in April. For both months, B.C. declined less than Ontario and Quebec. Big chains and small shops announced closures or filed for bankruptcy protection within the first few weeks, but many were already struggling. COVID-19 was the final blow for companies with, as they say, pre- existing conditions. In Vancouver, there will be no more Army & Navy department store, J.Crew clothing or Ronsons shoe shopping. Red Cat Records, a local seller of vinyl, announced it would shrink from two stores to one. That's just the beginning. "Most of those [announcing now] will likely not come as big surprises," says Jim Smerdon, a Vancouver-based VP at Colliers whose team is tracking closures and restructur- ings. But, he predicts, there will be more: "Others could come as surprises." The more-resilient businesses haven't thrown in any towels yet. What happens in the next year may bring some of them to their knees, though. Post-pandemic, the future of retail in this province is potentially rockier than elsewhere, owing to a couple of made- in-B.C. factors. Vancouver and Victoria have been destinations for waves of free- spending American and Asian tourists. B.C. lost 400,000 jobs in March and April, according to Statistics Canada. That's much more than some observers had predicted for a province where many sectors had stayed open, but our larger proportion of tourism and personal service jobs boosted the numbers. In Vancouver, in particular, tourism dollars have supported a level of luxury shopping and general consump- tion uncommon for a region the size of the Lower Mainland. The other special factor for B.C. is the difficulty of doing business in the province's retail power centre: the City of Vancouver. For many years, the city has been a brutal place to run a shop or restaurant, for two prime reasons. One is spiralling property taxes, driven by an intense pace of redevel- opment. The second is a local bureaucracy that has turned commercial renovation permits into a Kaaesque endurance con- test. The same tortuous process has been spreading to other municipalities, explains Sean Ogilvie, vice-president of the retail division at Vancouver's Lee & Associates commercial brokers. There's no data on how much of a drag a slow bureaucracy can create, says Jock Finlayson, vice-president of the Business Council of British Columbia. But he doesn't doubt it's had an impact here: "It makes intuitive sense that we had more retailers, more restaurateurs on the margins." And the region will pay a cost for that. "I do think Metro Vancouver is in for some very painful adjustments," Finlayson says. "For property owners, it's been a very lucrative asset class. There will be more retail destruction." THE NEW NEW WORLD OF RETAIL If the pandemic proved anything, it's that people will find a way to shop even under extreme duress. Once B.C. residents recov- ered from the paralysis and sense of global doom in the early weeks, credit and debit cards were vibrating fiercely at places well beyond the essential food stores, pharma- cies and liquor outlets. Vancouver-based Article (see p.25), the online-only furni- ture company that has attracted atten- tion for its savvy business model, doubled sales in April. Purchases boomed for the fast-thinking bookstore owners in town (Pulp Fiction and Kidsbooks among them) that offered easy ordering and free deliv- ery. There were hour-long lineups at craft stores, garden shops, bike stores, and hard- ware and lumber outlets. But for many other businesses— clothing, home decor, shoes, jewelry, elec- tronics, musical instruments, day spas— the world shock of the pandemic meant having to move into a very different gear to generate sales and keep their heads at least a little above water. That, in a way, was a good thing. "The pressure is forcing the thing that was taking far too long," says David Ian Gray, founder of Vancouver-based retail advisory firm Dig360 Consulting. "There's been a total reset, reinvention, transformation that, candidly, was not happening fast enough." Some of the bigger—and often older—companies struggled to adapt. "They CLOSING UP SHOP Vancouver-based Aritzia has reopened after shutting all 97 of its stores in March

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