I have just written a post about London England where businesses in the suburbs have returned to pre-Covid pandemic levels of expenditure but the central downtown part of London is still economically suffering. With only 25 percent of downtown workers returning to the central core, expenditures at stores have remained low, supported by the 330,000 people that live in the downtown. While driving and biking rates have returned to pre pandemic levels in the downtown, transit usage is down by 50 percen
Mario Toneguzzi with the The Retail Insider reports a similar situation with Canadian downtown retailers. More rurally located retailers are reporting that 37 percent are returning to normal sales, while downtown urban areas are reporting that only 22 percent of their businesses are.
Laura Jones, Executive Vice-President at CFIB, Canada’s largest association of small and medium-sized businesses with 110,000 members across every industry and region. “Consumer spending is the key to survival for all businesses… The first thing is a lot of office buildings have been emptied out. Some have a handful of workers going in but many are still not going back to their offices. So if you’re a coffee shop downtown on the corner that relies on the traffic from those office buildings, a typical weekday morning you’d be quite busy but now you’re empty or almost virtually empty.”
The absence of downtown workers coupled with no foreign tourists has been catastrophic for many downtown businesses especially in Montreal, Toronto, Vancouver, Ottawa, and Calgary. In these cities many businesses survive or are geared towards the tourist trade.
The Downtown Vancouver Business Improvement Association (VBIA) has created a “Covid 19 and Economic Recovery Snapshot” that shows foot traffic in the downtown area is about 25 percent of that for the same period in 2019. Even though pedestrian use of the downtown retail corridors have almost doubled from April to June of this pandemic year, that is still one third of the level from the previous year.
Charles Gauthier, President and CEO of the Downtown Vancouver BIA points out that weekend retailing demand is strong but the absence of tourism and hospitality clients is problematic. While there are close to 100,000 people living in the downtown area what tourism and hotel occupancy will look like in the future is hard to predict.
The Executive Director of the Toronto Association of Business Improvement Areas John Kiru used the donut hole analogy “because a lot of people are working from home and as a result not coming in and many of the businesses in the downtown cores are built on that transfer of a few thousand people or hundreds of thousands of people in Toronto’s case of coming in on a commute daily to work. ”
The thousands of students and faculty not returning to Toronto’s two downtown universities and instead going on line will also have a significant impact and Mr. Kiru sums the situation up the dire situation best: ““It is the fundamental way that businesses have been built within the inner core and the dependency is having a significant impact.”
Without that transfer of thousands of people to the downtown businesses will need to have elasticity to reboot to stay viable.
Images: gannetcdn BIV