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Hybrid business model key to post-pandemic recovery, Surrey experts say

‘That’s the new beast. That’s what the survivors are made of.’
People stroll through the Shops at Morgan Crossing on Sunday, May 16, 2021. (Aaron Hinks photo)

Prior to the pandemic, the popularity of online shopping started to cause a ripple effect that financially some hurt mom-and-pop shops across the country.

COVID-19 turned that ripple into a wave that’s starting to break.

According to a Statistics Canada study published last year, e-commerce sales more than doubled within the first three months of the pandemic, while retail sales hit record lows. E-commerce sales make up roughly 10 per cent of total retail sales in the country, according to Statista. However, that number has been steadily increasing every year.

Never in recent history have small businesses been under more pressure in the City of Surrey, and Canada, than they are today. Revenues started to slump with the arrival of big box stores at the turn of the century, which experts say was a death sentence for many small businesses. Property values started to dramatically increase, then the internet resulted in more business being diverted away from mom-and-pop shops.

RELATED: Consumers flocked to online shopping as pandemic hit, with e-commerce sales up 99%

While small businesses were fighting to compete with internet giants like Amazon and big box stores like Walmart, they were hit with a pandemic.

Surrey Board of Trade CEO Anita Huberman and Simon Fraser University marketing professor emeritus Lindsay Meredith both agreed that COVID-19 has created a new economy for small business owners, one of which involves innovation, adaptability and changes to delivery.

In addition, Huberman said the increase in popularity of online shopping is here to stay, and it will have an impact on the economy.

“It’s a reality. It’s going to happen and that means that retail, for example, will have to innovate,” Huberman said. “It’s a new economy that we’re going to be living in. We’re asking everyone to support local, absolutely, but local is also going to have to have a hybrid approach to how they sell their goods and services.”

Meredith referred to the small businesses that were quick to adapt and remained open through the pandemic as the “Darwinian survivors.”

“Was there a body count? No question about it. But what is left, what is now still surviving, those are going to be, what looks to me, very robust operations,” Meredith said. “These guys figured out how to make it work. They seemed to figure out how to adapt the technology, how to use that to compete against the big box, how to make the business model change so that they weren’t stuck totally in that bricks-and-mortar mold anymore.”

SEE ALSO: ‘Always ready to adapt’: Surrey small businesses stay resilient in a year of COVID-19

Meredith said he expects some of the businesses that were killed off by the pandemic to “raise from the ashes.” He said they may find success in a delivery or hybrid model.

In addition, Meredith said the pandemic may have taught some businesses that they don’t need an elegant storefront, or the best location, to run a successful hybrid model.

Product by delivery is far from a new concept in North America. Sears built its reputation on delivery in the early 1900s, long before they opened major big box stores across the U.S. and Canada.

“How unique that Sears could not survive the transition and yet the model of functioning we’re all looking at today is one that very much depends on the delivery game,” Meredith said.

Through the 1980s, Sears was the largest retailer in the U.S. Sears’s parent company filed for bankruptcy in 2018.

While e-commerce sales continue to trend upward in Canada, Meredith said that doesn’t necessarily signal the end of brick-and-mortar operations.

“I think we’re going to see some serious revision of bricks-and-mortar. Look at marketing research, shopping in itself is, in fact, considered a leisure activity,” Meredith said. “The bricks-and-mortar experience is still a very important one.”

Meredith said studies show that shoppers use the internet to do price comparison, then visit brick-and-mortar stores to test, or try on a product before purchasing it.

Looking beyond the pandemic, the small businesses that couple technology, a brick-and-mortar location, and delivery have the best chance at success, Meredith added.

“That’s the new beast. That’s what the survivors are made of.”

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About the Author: Aaron Hinks

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