Will 2020 be the Beginning of The End for Brick and Mortar Businesses?

COVID-19 has had a devastating impact for Canadian businesses, as well as those all over the planet. In many ways, the world may never be the same again after the coronavirus crisis.

Brick and mortar businesses have been given various types of stimulus in order to try to help them keep going through the pandemic, but there is no doubt many will have to close down.

Here are some of the sectors where the expected long-term economic impact of COVID-19 could mean that it is the beginning of the end for many brick and mortar businesses.

Retail

The retail sector has been hit particularly hard by the coronavirus crisis. Recent statistics show that retail sales in May 2020 were 20 per cent down on a year ago. This is despite the fact there was a rise of 18 per cent in the month when compared to April.

Another bump in retail sales will be expected for June when that data is ready to be released. However, for a lot of brick and mortar businesses in Canada, this will simply be too late. The May data, while encouraging, did not hit the 20 per cent rise in retail sales that was forecast.

While some stores will be able to pivot to ecommerce and have already had some success by embracing online sales, this is not going to be possible for all companies. The high street has already been damaged by the internet and COVID-19 may prove another devastating blow.

Economists such as Benjamin Reitzes from the Bank of Montreal believe that the recovery could be slow, which is not good news for bricks and mortar retailers across Canada.

He said: "Retail sales are rebounding strongly boosted by pent-up demand and as government income support measures provide a lift to household spending. While it looks as though retail activity returned close to pre-COVID levels in June, expect the broader economy to experience a longer, more drawn out recovery as the pandemic continues to weigh on a number of sectors."

Some stores, such as those selling high-end products like jewellery, may still have a future after COVID-19. But there is no doubt the retail sector is set to undergo huge challenges this year.

Casinos

Some casinos in certain parts of Canada have already been given the green light to reopen, but it is doubtful whether the sector can ever be as successful as before in the post-pandemic era. With social distancing measures in place, most types of table games closed and buffets no longer available, the experience of a Canadian casino visit is no longer as fun as it once was.

Many players have also got used to heading online to play their favorite casino games such as slots, blackjack or roulette. After all, just click a button and you have access to more casino games than you will ever find in even Vegas. The flexibility offered by an online casino is something that a bricks and mortar business in this sector will never be able to match.

Promotions and bonuses also tend to be more appealing at online casino sites, adding another reason why bricks and mortar facilities may find it harder to remain open at this time. The gaming industry in Canada accounts for more than 180,000 jobs according to data from the Canadian Gaming Association, but that number is surely set to fall in the coming months.

Restaurants

As well as casinos and retail stores, restaurants could also be in a lot of trouble due to COVID-19. Many businesses in hospitality and tourism have troubling times ahead, but for restaurants already struggling due to tiny profit margins, the crisis might kill them off.

Many restaurants were able to pivot to providing home delivery early on in the crisis but getting back to full capacity promises to be a long and difficult process across the industry. A spike in coronavirus cases in parts of Canada has also been linked to bars and restaurants reopening.

Hundreds of millions of dollars has been pledged as part of widespread support measures, but some feel that this financial help will still not be enough to help all restaurants to stay open.

Even at those restaurants that are trying their best to bounce back from COVID-19 closures, making the experience as normal as possible is not going to be easy. Tables will be more widely spaced apart and there will be more frequent cleaning, while staff might wear masks and gloves. Hand sanitizing stations are likely to be common too, but diners may prefer to stay at home.

Most restaurants in Canada that have reopened are operating at around 50 per cent capacity. This situation is unlikely to be sustainable for more than a short period of time, so the future of a lot of restaurants is likely to be in severe doubt as a result of the coronavirus crisis.