B.C. is arguably having a crisis of confidence.
While it might be unpleasant, consumers and small business owners alike are feeling less confident about the future, according to different surveys.
Data, too, paints a bleak picture.
Statistics Canada data today show B.C. restaurant sales growing at a far slower rate than they are in the rest of Canada. Legal cannabis wholesales in B.C. are increasing at the slowest rate on record. Spending on alcohol wholesales in B.C. has declined in each of the the last four quarters year-over-year.
The recent closure at Small Business BC, which provided grants and services to smaller businesses likely only added to business-owner angst. Small Business BC filed for bankruptcy in early December.
B.C. small business owners are the least confident among owners in Canada that their ventures will perform better three months into the future, according to a Canadian Federation of Independent Business (CFIB) survey conducted in October for a November report.
They are the second-least confident that their businesses will perform better in 12 months, behind only Newfoundland-based owners.
CFIB found 46.3 per cent of B.C. respondents expected their profitability to improve in three months. That is down from 48.1 per cent one month earlier and down from an average of 54.3 per cent across the 15 years CFIB has asked this question in surveys.
The outlook 12 months out was slightly better.
There were 55.4 per cent of B.C. small business owners who said in October that they expected their business to fare better in 12 months. But, that was down from the 56.5 per cent one month earlier, and from an average of 67.4 per cent since February 2009.
What makes that low confidence level for a one-year outlook surprising is that B.C. small-businesses owners have historically, on average, led all provinces with the most optimistic outlooks.
“It's not just the comparison over time, it's a comparison to where we are relative to other provinces in Canada,” said B.C.-based CFIB policy analyst Emily Boston.
“Most of those provinces have a far more optimistic outlook looking ahead over the next year, or just in the short term.”
Small business owners across Canada have had some good news in 2024, including the Bank of Canada cutting interest rates five times—in June, July, September, October and December—to 3.25 per cent from five per cent.
Inflation has eased to 1.9 per cent in November from a 39-year high of 8.1 per cent in June 2022.
The problem is that while lower inflation may be a comfort to Canadians, many workers’ wages have not kept pace with the high inflation of the last few years.
“Consumer sentiment heading into this holiday season is somewhat subdued,” Morningstar DBRS noted in its Nov. 27 commentary.
“Consumer purchasing power remains stretched given the still-challenging macroeconomic environment.”
A Nanos survey released Dec. 9 found similar consumer skittishness.
Its Weekly Bloomberg Nanos Canadian Confidence Index found that there were almost four times as many Canadians who thought the economy was likely to get weaker in the next six months, rather than stronger.
One month ago, only about twice as many Canadians thought the economy would get weaker within six months, rather than stronger, according to Nanos' research.
Local owners say they feel the pinch
Les Amis Du Fromage co-owner Joe Chaput told BIV that he is more eagle-eyed when checking invoice receipts to ensure that he notices all of his suppliers’ price increases.
“Sometimes from one invoice to the next, prices can increase 20 per cent,” he said.
When suppliers charge him more for inventory, he changes prices in the point-of-sale systems at his two Vancouver cheese shops, he said.
A Canadian dollar below US$0.70 pushes prices up for shipments from many countries, particularly the U.S.
“Since COVID, everything just across the board is more expensive,” Chaput said. “The cost of shipping is almost doubled.”
Vancouver’s well-known problem of rampant street crime and vandalism is another frustration that erodes confidence.
Chaput said his confidence level of running a successful business is about the same as it has been in the past couple years but that is largely because he tries to take things in stride.
About two years ago, vandals damaged his rooftop air-conditioning unit. He reported the $15,000 damage to the insurance company and then stickhandled logistics of a provincial grant program set up to help victimized business owners.
He wound up getting some money from the province, which helped pay for much of the deductible, he said.
Labour costs are another source of angst.
Chaput’s habit is to start paying employees slightly more than minimum wage, and that has remained the case even as B.C.’s minimum wage has soared from $11.35 per hour in early 2018, to $17.40 as of June 1. That is a more-than-53-per-cent increase in a little more than six years, and has given B.C. the second-highest such wage in the country.
Chaput said he gets plenty of applications when he posts recruitment advertising. The higher wages, however, mean he is very careful when scheduling to ensure staff only work when necessary.
The B.C. government initiated another payroll cost at the start of 2022 when it became the only province to require that employers fully pay up to five sick days per employee, per year.
Some burdens on B.C. businesses come from the federal government.
For example, B.C. small businesses are not eligible for federal handouts, such as Ottawa’s $2.5 billion Canada Carbon Rebate, because B.C. runs its own carbon-tax system.
About 600,000 small businesses in other provinces are expected to benefit from upcoming federal carbon-tax rebates, according to Ottawa.
Many retailers told BIV that while their confidence has not waned in recent months, they are concerned about diminished store traffic.
Naman Gupta co-owns the fashion, accessories and homeware boutique Urban Villa, which has operated on Davie Street for decades.
He told BIV that compared with a year or two ago, there is far less browsing. Much more store traffic is from regulars instead of spontaneous visits from passers-by.
“It comes down to affordability,” he said. “The number of people visiting businesses has gone down. A lot of people who would have used to come by and visit, just to look around, are not doing that. It's not the same anymore.”
Manuel Bernaschek concurs.
He said consumers’ reduced eagerness to browse is present even among those in higher wealth brackets.
Bernaschek owns the Vancouver location of the high-end Italian fashion house Stefano Ricci as well as two Showcase Piano stores, which carry pianos that range in price up to about $500,000.
“I have security cameras running and I can see all three stores,” he said. “I just look at it week after week and they are three empty stores.”
His confidence about the future is about the same as it has been, he said, thanks to slow but steady sales of pricy Fazioli pianos.
“Since the American election, for a lot of people, things are on hold,” he said. “Everybody is kind of worried about what is going to happen.”
