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The 'shop local' message is everywhere, but it's tough resisting deals during a pandemic

Are you on board the shop local movement that's rolling across Canada?

The encouragement to support neighbourhood businesses is coming from all quarters as the economy struggles to emerge from the financial devastation of the COVID-19 pandemic.

Whether it's provincial and municipal initiatives, chambers of commerce programs, highly publicized incentive campaigns backed by financial giants, or small signs in front of individual businesses, the message is the same: Show your local entrepreneurs some extra love during these difficult times — it's important for helping the economy recover. 

While recent polls suggest most Canadians support the idea, actually getting people to prioritize shopping locally over scoring the best deal and the convenience of shopping online is a tough sell during a pandemic, some experts say.

Consumers lack confidence

The pandemic has left many people out of work and feeling insecure about their finances, which could make finding the lowest prices more important than supporting local small businesses.

The Bank of Canada's most recent survey of consumer expectations showed that virtually all indicators have deteriorated due to the impact of the pandemic, including people's expectations for wages, spending, labour market conditions, inflation and growth in house prices.

"Everybody is trying to find a deal because they don't know how long their money is going to last," said economist Armine Yalnizyan.

And maintaining low prices can be a challenge for small enterprises, she said.

"They have a hard time providing deep-cut bargains, especially now."

A billboard ad from American Express encouraging shoppers to spend locally is on display over Toronto's Yonge-Dundas Square on Aug. 4. (Evan Mitsui/CBC)

Still, surveys done since the pandemic began suggest there is growing support for small businesses in this country. A key finding from a Leger poll conducted in April was that "Canadians say they are buying local products more often or for the first time."

American Express Canada said 83 per cent of participants in an online poll in June agreed it was time to support the small business community, while 76 per cent said they were "determined to shop local more than in the past." The poll wasn't randomized, but a comparable random poll would have a margin of error of four percentage points, 19 times out of 20.

Who says they don't support small businesses?

But Wayne Smith, a professor at Ryerson University's Ted Rogers School of Management who specializes in consumer behaviour, says what people tell researchers can differ from how they actually behave in the real world.

"It's kind of like asking if people like puppies," he said. "Everyone's going to say they like puppies. But how many people go out and get a puppy?"

Smith compares the shop local phenomenon to consumers committing to shop at stores that specialize in environmentally friendly, sustainable products.

"Some do it, but it's a relatively small proportion of the population," he said. "Otherwise, Walmart would be out of business."

People walk and shop in Ottawa's ByWard Market on June 25. (Hugo Belanger/CBC)

Buying decisions are based on "perceived value," Smith said. Locally sourced goods or services must be of equal or greater quality than those found elsewhere if consumers are going to follow through on their good intentions, he said.

Julia Gray of Toronto said she and her family are happy to shop locally as much as possible and support small businesses instead of large corporate chains.

However, as an artist, she is also very value conscious, she said.

"My income is always a bit in flux, so, as a family, we've learned to be careful about our spending."

Julia Gray of Toronto shops regularly at her local green grocer. She said she prefers to support small businesses instead of large corporate chains, and the pandemic has made her even more selective about where her money goes. (Submitted by Julia Gray)

Even so, the pandemic inspired her to make a more concerted effort to support her neighbouring businesses, she said.

"Instead of ordering from Pizza Pizza or some other corporate pizza place, let's order from the local place where their kids go to school with our kids," she said. "These places won't survive if we don't help them."

Amazon sales booming

Gray says small businesses can also be preferable from a health perspective.

"We have folks in our family who are immunocompromised," she said. "We don't want to go where there are big groups and you can be more exposed to the virus. Smaller shops don't have as many people in them."

She avoids shopping at Amazon, she said, because it's one way to express her values.

"You can vote, and you can decide where to spend your money," she said. "We think about workers — are they treated fairly? Are they protected? And in whose hands does our money end up?"

But Lonnie Delisle, a choir director in Vancouver, is a fan of Amazon.

"It's so convenient. The price point is good, the selection is good," he said. "The ease at which you can find things and make the purchases. Amazon is exceedingly user-friendly."

Packages are sorted to be shipped inside of an Amazon fulfilment centre in Robbinsville, N.J., in this photo from November 2017. It's difficult for small local businesses to compete with an online behemoth like Amazon. (Lucas Jackson/Reuters)

Delisle said he tries to shop with Canadian companies as much as possible, often checking the Bay or Canadian Tire first.

"But when you need something, and [Amazon has] what's available, that's where we go."

Amazon has thrived during the pandemic, with sales jumping 40 per cent compared to the same time last year. Revenue from international markets such as Canada has also surged due to increased demand.

Big businesses offer incentives for shopping locally

However, even some very big businesses in Canada are trying to get the message out about the importance of small businesses.

The Royal Bank and American Express Canada are both spending big bucks on multimedia advertising campaigns to encourage consumers to shop locally, and offering financial incentives to customers who support small businesses.

RBC's Canada United campaign offers customers extra points on their RBC Rewards card by shopping locally.

The bank also produced a video about the importance of small businesses and will donate five cents to a special fund every time someone views the video, or likes or shares it on social media. Entrepreneurs will then be able to apply to the fund for grants up to $5,000 to help them cover costs associated with keeping their business afloat through the pandemic. 

American Express Canada's Shop Small initiative gives cardholders $5 in credits when they spend at least $10 at up to 10 different small businesses, to earn a maximum of $50 in free money. The company has also created a Shop Small Map to direct shoppers to eligible stores.

"It's good for our economy," said Kerri-Ann Santaguida, vice-president and general manager of merchant services for American Express Canada. "It's about the vibrancy of neighbourhoods across the country."

Economist Armine Yalnizyan says household debt was a huge issue in Canada prior to the pandemic and she worries about what will happen when CERB payments stop. (Christopher Katsarov/The Atkinson Foundation)

Economist Armine Yalnizyan said the strategies of American Express Canada and RBC are similar to that of the federal government, with its rent relief program and small business loans, because they recognize that businesses are the engine that will pull Canada's economy through the crisis.

"We can't have resilient communities without resilient small businesses," said Yalnizyan, who holds a fellowship on the future of jobs from the Atkinson Foundation, a Toronto-based charitable organization focused on social and economic justice.

The fact is, she said, big financial institutions such as RBC and American Express Canada depend on a healthy economy.

"They're trying to keep as many businesses afloat as possible," she said, "which will minimize the increase in permanent layoffs."

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source https://www.cbc.ca/news/business/shop-local-covid-19-pandemic-small-businesses-1.5675070?cmp=rss

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